How To Determine The Market Value Of Your Home
Determining the market value of your home is part art and part science. It can also be considered both simple and complex at the same time. However, the market value of a home is different than the replacement value which is often used for both tax assessment and replacement cost by states and insurance companies. Tax and insurance take into account materials and the value of the land but the market value takes into account more subtle nuances like presentation and whether or not it is a buyer or seller's market.
The reason why the market value of a home can be considered both simple and complex and part art and part science at the same time is because some values are tangible while others rely on a keen eye and experience. The simple part of the evaluation is taking your home and finding other homes of similar construction, size and specification to help establish a general price. The science aspect involves the tangible criteria of the cost of the existing loan and any additions or modifications which can be used to establish a pricing floor. As all home buyers and home sellers know, if it were that easy there would be no need for real estate agents. Realtors have not only additional tools and resources available at their disposal but often times many years of experience and insight which help determine the correct market value of your home.
Many home buyers when purchasing their first home will take advantage of the opportunity to do upgrades and make improvements to cabinets and flooring. While starting off with a general price per square foot of comparable homes in the area might be sufficient initially, it won't take into account various improvements such as laying hardwood floors or installing granite counter tops. Putting a deck in the backyard or adding a hot tub are considered tangible benefits which can be easily quantified when determining the market value of the home. However, smart home buyers consider less obvious costs when buying a home. These intangible benefits include things like corner lots or cul-de-sacs and driving distances to major roads or the city center. Where schools are located, especially for couples looking to start a family, and area crime rates are also not associated with direct costs but affect the market value of the home.
It cannot be overstated how important a licensed and experienced realtor can be in determining the proper market value of a home for sale. A realtor's insights and analysis take into account all tangible and intangible factors to help properly price a residence for sale. It is common for homes which are being sold by their owners to often be over priced or under priced. This means the home stays on the market significantly longer than it otherwise would or the home is sold with money left on the table which no one ever wants to happen. Realtors also have access to what is called the Multiple Listing Service, or MLS. The MLS not only lists what properties are currently available on the market but more importantly will provide access to homes which sold and for what amounts. This is an invaluable insight because it provides a clear picture into whether it is a buyer or seller's market. By showing the difference between what houses listed for and what they sold for, it will provide guidance as to whether your home should be priced higher or lower than comparable homes in the area.
If you live in a typical neighborhood it is possible to determine the market value of your home with some careful analysis and introspection without the need of an agent. You still run the risk of either overpricing or underpricing the property but it is not impossible to do for those determined to sell their home without the use of a realtor. However, for individuals which own custom homes it can be almost impossible to properly price a residence. There are realtors who specialize and dedicate their careers to selling high-end custom homes and may be the only ones qualified when determining the market value. It never hurts to talk with one or more realtors when looking to sell your home. More often than not in order to get your business, they will give you a general price of what your home is worth during the initial consultation. As a best case scenario do your own analysis while speaking with experts in the field and you'll have the best chance of determining the best market value of your home.
