Three Ways to Determine Home Value

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One thing that remains sort of a mystery to many homeowners is who determines the value of their home and how it is done. Today, I am going to erase that mystery and tell you exactly what you need to know.

Consider this: a home is much like a commodity. Its pricing is not determined by anything other than what the fair market values the home to be. In other words, what will buyers pay for your property? Contrary to popular belief, factors that do not have any on the value of your home include 1. What you may have paid for it, 2. What you need in terms of value or 3. What the neighbors sold their home for. Well, the third point may be somewhat true (see point #3 below).

The way the housing industry does determine the fair market value of a property is through one of the following three things. 

Assessed Value As Deemed by the Local Municipality

This is the figure that comes to you each year from the Board of Review or County Treasurer’s office. Also called the State Equalized Value (or SEV), this number is often not aligned with the fair market value because it is capped at a 5% increase in most states. Furthermore, each time a home is conveyed to another owner, the SEV and Taxable Values become the same.

Appraiser’s Value Determined by a Licensed Appraiser

A huge part of purchase transactions, appraisals are reports that are formally prepared by professionals that are licensed in the field. They can be determined in one of three ways and depending on the appraiser performing the task, the valuation can vary significantly.

Market Value Arrived Through a Competitive Market Analysis

For consumers, the best way to know their home’s value is through a Competitive Market Analysis. The CMA, also called a Comparative Market Analysis, is a report compiled typically by a licensed real estate agent and it comprises of other like kind homes that sold in the last 6 months to a year. The key is that these properties reflect current buying trends.

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We know that if you’re looking to sell your home, making sure it is priced competitively is absolutely critical in the market these days. A home that is well priced will not only sell quicker but is also more likely to sell for top dollar as compared to over (and under) priced homes. If you would like a custom home valuation report on your property, call us today! We will be happy to provide you with an accurate estimate of what your home will sell for in today’s marketplace.