There are many different values that can be given to one home, such as market value, assessed value, or appraised value. When buying or selling a home, each price has its place and use.
While appraised values and assessed values are important, they require a professional to accurately determine and are not the same as market value.
In this two-part article, Part 1 details what a home’s market value is and what factors can impact its value and Part 2 shares tools to help you determine what the market value of your home is currently.
Part 1 of 2: Defining home market value
Your home’s market value is basically the “fair” price a house would likely sell for to a willing buyer. This price is based on facts, such as home size and number of bedrooms, and the average selling price of similar homes sold in your area.
One of the top reasons you may need to know your home’s market value, also called its “fair market value,” is to price your home for sale or to determine if the price someone is asking for their home is fair.
Items that factor into your home’s market value include:
- Home size and lot size
- How it looks, also known as “curb appeal”
- Current supply and demand for homes in the neighborhood
- Where the home is located and how much other nearby homes have sold for
Market value differs from assessed value, which is the value of a home as noted by an assessor, taking into consideration the areas local assessment rate, and is mainly utilized for tax purposes. This is usually lower than a home’s market value. An assessed value is not likely to change much, while market value can change based on many factors, such as neighborhood homes in disrepair or selling for lower prices.
Market value also differs from an appraised value, which is how much a licensed appraiser will value a home at. This price often takes into consideration a home’s market value, and adds in the value of added amenities and the condition of the home itself. Keep in mind that foreclosed or bank-owned homes can decrease the appraised value of your home.
Part 2 of 2: How to find out your home’s market value
If you are using a real estate or listing agent to help buy or sell your home, one of the jobs you are paying them for is to accurately determine your home’s fair market value. If you are not working with an agent or just doing some research, you can come up with a market value for your home yourself. To determine your home’s market value:
Step 1: Research selling prices. Find out how much other homes in your neighborhood that are similar in lot and home size have sold for. Remember, the prices listed for a home for sale is considered the “asking price,” and only selling prices impact nearby home’s market value.
Step 2: Go online. There are several websites
There are many tools available to help you find out what your home’s market value is. Some of the more popular websites and tools include:
Step 3: Hire a professional. If you are not working with a real estate or listing agent to buy or sell your home, but do not have the time to do the research, you may consider hiring a professional to do this part of the hard work for you and help determine a market value. An appraiser can provide you with a home’s market value as well as its appraised value, as they take the market value into consideration in their appraisal.
Understanding the market value of your home can help you determine a selling price for your current home or if a price to buy a home is a deal. At times when house values are lower, it may be a sign to wait to sell, but could be a good time to buy.