First Things First
First of all, to determine the current market value of your home under normal conditions takes several factors to consider. Before deciding on asking for a higher price for your house, do a little comparative market analysis for yourself.
Comparing Homes
Look at similar houses in your area and recently sold properties to see the comparable sales history around you. This sort of sales comparison approach will also be used by any professionals or services you employ.
Fair Market Value
The current value (or fair market value) of your home is an estimation, or an ‘assessed value’ (AKA: ‘educated guess’-!), of what your house would most likely sell for on the open real estate market today. Some of the data assessed, as in most other tools or methods, figures in comparable sales of similar properties in the area.
Accurate Representation
The fair market value of your home should represent your home just the way it sounds. A fair assessed value of what your house is worth on the open market, subject to current market conditions, of course.
Online Tools – AVMs
There are many online tools you can utilize to help you determine market values. They use what’s called the automated valuation model, and are typically offered by real estate websites. All you have to do is put in ‘what’s my home’s value’ and all kinds of estimator tools will pop up.
AVM Data
These AVMs use data from public records including your annual property taxes, where the fair market value of a home over the previous year can be found.
They also use deeds of ownership, property transfers, tax assessments, etc., and other mathematical data and information.
Only A Rough Estimate
However, sellers are cautioned from putting too much confidence in an AVM’s market value estimate and advised to speak to a real estate agent first. But it will give you a good idea and thus greater control of your sale price.
Property Taxes
If you weren’t aware, you can find your home’s assessed value on your property tax bill each year. Local Assessors offices get appraisal reports for all the houses in a specific area, and reflect this appraised value accordingly. Incidentally, the insurance premiums on your house can fluctuate with your home’s value, as reported by the Assessor.
A Professional Appraiser
The fair market value amount is not the only tool used to determine a home’s value. A professional appraiser will create a report after a visual inspection of your home. They will take many other factors into consideration in their report when determining the value of a home.
Points Considered
Some of these factors are things like the home’s square footage, special amenities of the home, the condition of the home, recent sales of comparable properties in the area, the reported fair market value, and current market trends.
There are many more points considered when having a professional appraisal done in person. The mortgage lender will require that one is done, as part of the process.
The Appraisal Itself
A low appraisal or appraised value could result in a deal falling through. At the same time, a higher value could cut out a potential buyer. It is for these reasons they are careful with their assessment of any home value. The report they prepare will be thorough.
Determines Sale Price
In addition, though it will cost the buyer anywhere from an average of $4-500 to as high as $1500, a professional appraisal will be the most comprehensive and relevant figure of all.
This will determine not only the value of a home but essentially, the home’s sale price. Why? Because this figure is what the lender goes by as the home’s market value when financing a buyer.
Other Properties
All in all, the biggest and most widely used piece of information in determining the fair market value of a home, is the sale prices of comparable properties sold recently in your area.
By knowing information about the recent sales of comparable homes in your neighborhood, and staying on top of the real estate market, you will always be able to accurately estimate your property’s market value.
The Bottom Line
Of course, the bottom line is that the value of a home is truly determined by the buyer. A home sale price can change according to what the buyer is willing to pay. This happens typically in a limited real estate market. In other words; not enough supply (properties) to meet the current demand (buyers).
Unexpected Factors
Unpredictable factors such as what school district you live in can also influence the sale price, or a little more square footage in your kitchen. Long-term interest rates can also influence what is considered the FMV, or fair market home value.
Listing Prices
It all comes down to what you can get for your home investment. The asking price at a home sale is typically set in accordance with the home’s market value. In the end, the sale price is usually pretty close to the listing price.
There should be some room for negotiation, however. You can generally expect about 10% of the asking price to be negotiated.
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