What Is Your Home Worth?
What is your home really worth?
How do you know what your home is really worth in today’s market? Estimating your home’s current market value is the first step in deciding how to accurately price your home, and that entails comparing your home to the most similar homes recently sold in your neighborhood. Estimating an accurate market value can be challenging because market values are fluid, the real estate market is constantly changing…
What is Market Value?
Market Value is what a qualified buyer is currently willing to pay for a certain property on the open market, which is what the sale price would be. Market value is different from appraised value or assessed value, those values serve different purposes. If you are selling your home, you want to use the market value when setting the asking price.
Appraised Value is what a lender uses to assess risk and the collateral value of a property when determining an acceptable loan amount for the buyer. It is usually close to the market value but can be higher or lower depending upon market conditions.
Assessed Value is what the property tax authority uses to determine current property taxes. Assessed value may be significantly lower than market value due to homestead and other exemptions.
There are many influences on market value which can affect your market value both positively and negatively, below are some of the main factors that are considered when determining a homes current market value…
Factors That Directly Influence Market Value
Physical Condition, Inside and Out
Square Footage, Room Counts, Parking
Improvements Completed or Needed
Lot size, Location, View
Proximity to Schools, Shopping, Transportation
Recent Comparable Closed Sales
Current Inventory, Sales Volume, and Absorption Rate
Current Market Trends in Your Area
Local, Regional, National Economic Conditions
Current or Planned Projects Nearby
Flood Zones or Other Insurability Issues
Where do you find accurate market information?
A qualified local real estate professional is the best source for the current, accurate information needed to correctly estimate your home’s current market value. They will have all the necessary information on the most recent similar sales in your neighborhood including the condition and characteristics of the comparable homes.
There is an incredible amount of real estate “information” on the internet today, unfortunately not all of it is accurate. National advertising portals use massive amounts of purchased and scraped data to display listings and create questionable value estimates, but they typically don’t have local market knowledge.
What is an AVM?
Automated valuation models (AVM’s), like “zestimates”, are generic computer generated valuation estimates that should only be used as a broad starting point. These estimates are produced by algorithms that rely mainly on basic info scraped from county tax databases and don’t have the ability to consider vital factors such as property condition, updates, location, etc.
Example – one house is fully updated, has a pool, and is on a waterfront lot, while the house across the street is in disrepair inside and out, needs a new roof, doesn’t have a pool, and backs up to busy road. As long as both houses are about the same age and size, the automated online value estimate of these 2 houses will likely be very similar but the actual market value will be very different.
What is a CMA?
A full Comparative Market Analysis (CMA) on your home will give you a much more accurate estimate of your homes current market value by analyzing comprehensive local data and the most similar/comparable recent sales in your local market. Beware of anyone or any agent that is using unsold listings (pending sale, backup status, expired) in estimating market values. An accurate analysis will only use SOLD listings, from the last 90 days if possible. Pricing your home accurately is the best way to sell it for the highest price in the shortest time.
What can you expect to see in the CMA that we prepare for you? A completed CMA is presented in the form of a report, which includes the all of the current market data, suggested selling price range, detailed information about your home, and the comparable properties that were researched to determine its value.
An accurate CMA includes the following information:
- Comparable Properties – the most similar homes that have recently sold in your neighborhood
- Adjustments based upon condition, location, and improvements of your home compared to others in your neighborhood
- A detailed report on your Home and the estimate of its value based on today’s local market