Fair market value
Refers to how your house appears to potential purchasers when compared to other homes in the neighborhood.
Take a look at the sale price of a property comparable to yours (same number of bedrooms and bathrooms, square footage or outdoor space).
If you hire a real estate agent to help you sell your house, your agent will begin by looking at comparable properties to see what buyers are prepared to pay for a home similar to yours.
When the appraiser puts a value on your property
While the assessed value of your house takes into account comparable sales, it is not the same as fair market value.
A qualified appraiser evaluates the location, size, and condition of your house, as well as any changes you’ve performed when determining appraised worth.
When a borrower buys a property or refinances their mortgage, mortgage lenders look at the appraised value.
Assessed value:
The assessed value of your home is the financial value allocated to it by local county tax assessors for the purpose of calculating property taxes.
“Tax assessors compute an assessed value based on a variety of criteria, including appraised and fair market value, as well as any home upgrades, whether you produce income from the property, and any tax exemptions,” says Jade Duffy, a Realtor with TXR Homes in Carlsbad, California.
According to Duffy, the assessed value is typically lower than fair market value and does not accurately reflect how much a property may sell for.
4 methods for determining the value of your home
- Use a home value calculator to enter your address.
Best for: Sellers, purchasers, or anybody interested about a home’s estimated worth.
There are several internet applications that provide a rapid assessment of a home’s worth.
These online tools, also known as automated value models or AVMs, construct an estimate using algorithms and publicly available data like as recent sales, tax assessments, and other public documents.
Because there are so many various home value estimators out there, each with its own methodology, your estimate may differ.
“Home value estimators are fantastic beginning places for swiftly determining the value of your home,” adds Duffy.
“However, this value is determined by an algorithm that considers the number of beds, square footage, location, and market activity…
Recent modifications, the quality of the property, curb appeal, and external issues such as road noise are not taken into account.”
- Request a free comparative market study from a real estate agent.
Who it’s best for: People who are selling or thinking about selling a house.
If you’re selling your home, real estate brokers often provide a free comparative market analysis (CMA) in the hopes of gaining your business.
To complete the CMA, the realtor gathers information on recent sales of comparable properties in the region.
They then use their expertise of the neighborhood as well as any unique features of your property to determine its worth.
This service may also be provided by a buyer’s agent for any home you wish to make an offer on.
Pros: Having an expert find comps, answer questions, and provide direction is beneficial.
Cons: Real estate agents may utilize various comparables or have differing perspectives on the worth of your house.
Furthermore, if there haven’t been many sales in the area or the comps aren’t very similar to your home, the estimate will be inaccurate.
- Go to the website of your county or municipal auditor.
Best for: Those who want to know how much their house is worth in terms of taxes.
The value of residential properties is assessed by county auditors on a regular basis for property tax reasons, and this information is available online.
You may search up your home’s assessed valuation to see if it has increased in value, or you can compare the values to those of comparable properties for sale.
- Engage the services of a competent appraiser.
Best for: Those who want the most professional home value assessment and may wish to talk with a mortgage lender using the information.
Before authorizing a loan, mortgage lenders use appraisers to verify the property’s worth.
Although engaging an appraiser is an option for some property sellers, it is not needed.
Similar to a CMA generated by a real estate agent, the appraiser evaluates the property’s attributes, such as how many bedrooms and bathrooms it has, as well as comparable sales.
Pros: Professional appraisers are usually licensed or qualified by the state in which they operate and can give an unbiased judgment on a home’s worth.
Cons: If you’re looking for a mortgage, you’ll have to pay for the lender’s evaluation.
According to HomeAdvisor, an assessment costs around $340 on average, but may range from $300 to $420.