Determining Market Value by Appraisal
Market value of a home can be determined by an appraisal. When buying a financed home the lender will require an appraisal to help determine market value. The home appraisal is generally ordered by the buyers lender. The appraiser is looking for the 3 most similar properties that have sold. These comparable homes should be the closest to square footage, lot size, bedroom count, and other amenities to the subject property. In a city or suburb the appraiser would prefer to see comparable homes that fall within a 1 mile radius. If possible the appraiser would actually prefer homes to be in the same subdivision. Appraiser will also look for sales having occurred in the last 60 to 90 days as these are the best properties to judge current market value of a home. The appraiser will determine market value based on these comparable homes. The method appraisers use to determine current market value of a home is called the sales comparison approach.
When buying and using financing the buyers lender will require the appraisal – and there is no way around that. A seller can also choose to have an appraisal done to help determine the market value of their home. The down side for the seller is the out of pocket expense for the appraisers service.
Having a Realtor help determine Market Value
A realtor can also help determine market value of your home. The best way a realtor can go about helping you determine current market value of your home is similar to that done by an appraiser. First the realtor will find comparable homes that have sold within your subdivision or area that closely resemble your home. Much like an appraiser a realtor looking to find your market value will want to stay within certain proximity of home, within a certain percentage above or below square footage of home, and home that shares similar amenities. A real estate agent can also help you determine what the current competition is in your particular area. In other words if you were to be going to market today, what homes would be in direct competition with your home for the current buyers in the market. Some agents call this way of determining market value, the CMA – community market analysis. Real estate agents like myself, are of course doing these analysis to help sellers determine their market value, but also to prepare to take on these homes for sale.
Biggest benefit of going through a realtor to determine market value of your home is that they generally will not charge for doing a CMA.