How to Determine The Market Value of Your Home

Tips to Determine a Home's Market Value

Every homeowner wants to know the market value of their home. It’s one of the most important steps in preparing for a sale, and it can be a daunting task. There are a number of ways to figure out the market value of your home, but the most important thing is to find the most accurate method.

Setting the right price from the get-go is paramount when you want to sell your property for the most money. An overpriced listing will sit on the market unsold and start to become stigmatized.

Home buyers always pay particular attention to the days on market for a home. As the days on market increases, it is not unusual for the list price to sale price ratio to decrease. This is certainly not a good thing when looking for top dollar.

So how do you ensure you price your home correctly? There are three common ways most people go about valuing their property including hiring a real estate agent, getting an appraisal done, or going on a site for an online valuation.

As you might expect getting a value from a professional is going to be far more accurate than going to a site like Zillow for a home value estimate.

Let's take a look at each valuation method a bit more closely.

Hiring a Real Estate Agent For a Comparative Market Analysis

One of the most vital functions of a real estate agent is to provide a seller with an accurate?market comparative analysis. Within the industry it is referred to as a real estate CMA.

The way a real estate ageny goes about completing a comparative market analysis is by finding the property field card online. In most multiple listing systems, a real estate agent will be able to pull the property field card record.

A real estate agent will then set an appointment with the owner to visit the property. Most real estate agents will walk though the property and generate a detailed set of notes.

Room by room the best features will be highlighted in the notes. For example what is the kitchen like? Is it high end with custom cabinetry, granite counters, and stainless appliances? How are the bathrooms? Are they updated with the latest features buyers are looking for? Does the home have hardwood floors? What is the lot like? Is there plenty of room for an addition and a great yard?

The age, condition, amenities, and location will play a significant role in determining the market value of any property. Once a real estate agent has gathered all this information, they will compare it to other nearby properties that have sold.

A detailed comparison will be made between properties, adjusting upwards or downwards based upon these criteria.

When the comparative market analysis is completed, a real estate agent should suggest an appropriate list price and a probably sale price.

The best real estate agents will be accurate with their CMA. The seller is relying on this information as a basis for whether they sell the home and also where to price it. It is one of the most crucial tasks a?Realtor does to earn their commission.

Hire a Local Real Estate Appraiser

Another way to determine the market value of your home is to hire a home appraiser. Appraisers will use similar methods as a real estate agent to calculate a properties market value. Like real estate agents, an appraiser will visit the home and get familiar with its positive and negative attributes.

Appraisers will also then find the most appropriate comparable sales to help arrive at a justifiable market value. When a buyer is getting a loan with a mortgage lender, they will usually get an independent 3rd party appraiser to provide a value.

If the?value comes in less than the purchase price?and there is an appraisal contingency in place, the buyer can back out of the contract. Even when there is not an appraisal contingency, a buyer may not be able to get financing from their lender.

A low appraisal is one of the?reasons some homes come back to the market.

In some circumstances the lender will waive the appraisal if the buyer is putting down a significant amount of money (usually more than 20 percent.)

It should be noted that when you hire an appraiser to obtain the market value for your home, it cannot be used by the buyer's lender. They will always ask for their own appraisal.

Keep in mind that an appraisal is nothing more than one person's opinion of value. It does not guarantee that what they tell you is correct. Most appraisers are great at what they do, but like every other industry there are those who aren't as accurate as others.

Since appraisals are one of the more?common real estate contingencies, it makes it more imperative to get the pricing correct.

Look at an Online Valuation

If you are looking for an accurate home value, the least accurate method is by visiting an online valuation site. Unfortunately, many folks go onto sites like Zillow and think the stated value is accurate.

Folks, most of the time it is not! Zillow has no idea if you've just dropped $100,000 into your home. Nobody from Zillow is visiting your property. They don't know if it is good or bad.

Expecting an online service to know the value of every property in the United States is silly. From personal experience, I have seen properties tens of thousands of dollars over and under the actual value.

Never hang your hat on this information. There are lots of?reasons to get a CMA?or an appraisal, the most important one being accuracy.

Final Thoughts

Getting the value of your home correct often boils down to who you've hired to provide the information. Remember pricing a home is a skill and an art. Some are better at it than others.

Look for someone who consistently prices homes accurately. The real estate agent who constantly reduces the price of their client's homes is not the person you want providing your home's value.

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