How to Determine a Current Market Value for Your Home
The only way to determine the market value for your home is to look at actual recent and comparable sales.
Comparable sales are recent sales of similar homes in the same or similar neighborhoods or in nearby neighborhoods. The properties used for comparison must have been Sold and closed. The sales must be recent, meaning within the last 3 to 6 months.
Looking at the listed prices of homes not yet sold is not a way to determine the market value of your home. These prices are often someones “wish list” of what they would like to sell their house for or what they paid for the house.
Tax assessed value is also not the current market value. Each tax assessor’s office will have its own individual approach to assessing the property within its jurisdiction. Some houses will have been assessed years before and the assessor may not have changed that value.
Sellers often want to inflate the price of their homes to “test” the market. An agent may list a property higher than the current market value to placate a seller. These inflated prices are NOT current market value.
Using comparable sales (closed transactions) is the correct way to calculate the value of your home. In theory, if three identical houses in a neighborhood have sold for $200,000, $205,000, and $210,000, a fourth identical house will sell within this price range. Identical means that location, size, and condition are exactly the same as the fourth home.
It is important when determining the current value of your home to compare the year built, numbers of bedrooms and bathrooms, and square footage.
It is also important to look at the date of the sales of the homes used in comparison. The sold homes may vary in per-square-foot price, and this often reflects the condition of the home and the added amenities of that home. For example, Home 1 may be built with adobe, and have good landscaping and an upscale kitchen. Home 2 may be a frame home with no landscaping and an antiquated kitchen. The difference in the per-square-foot sold price will reflect the differences in the homes.
Your agent will present you with statistics. When you look at these “stats” keep in mind the following:
- Look only at current sales and remember the most recent sales are the best.
- The comparison houses should be in the same, similar or nearby neighborhoods.
- Compare apples to apples
Your agent will calculate the per-square-foot price for your home based on these three factors. Setting a market value for your home is not an exact science, but by paying attention to the current sales, you should be able to set a price for your home that will get it sold.