Hometown Lawrence: How to determine a home’s fair market value
If selling or refinancing your home is part of your 2016 agenda, you will need to know the fair market value of what is probably your biggest asset. This is the price a buyer will most likely agree to and you will find acceptable for the purchase of your house under normal circumstances.
How do you calculate fair market value?
“There are many factors that go into the valuation,” said Chris Earl, co-owner of Stephens Real Estate. “There are the obvious objective criteria like size and age, which are used in formula based valuations like the County Appraised value and many online sources. It is the subjective criteria like condition, supply, updated décor, and functionality of the floor plan that really validate an analysis.
“This is where Realtors with information on comparable sales and current competition are far more accurate than algorithm based estimates. Active Realtors with boots on the ground have been inside many of the comparable homes and know how buyers perceived value.”
The most common way to determine fair market value is to look at the prices homes are selling for in the same area. Since every neighborhood is different, it is important to look at the houses that are for sale or have recently sold in your specific area. Comparing the prices of houses similar to yours will give you an idea of what to expect.
When selling a home, coming up with an accurate fair market value is key to a successful sale. Earl noted, “A house is new to the market only one time and it is important to create motivation for potential buyers from the start.”
A homeowner can also hire an appraiser to determine the home’s value. The appraiser will conduct an on-site review of the house and then compare the property with sales of similar properties in the area.
The easiest way to find out your home’s market value is to consult a Realtor. A real estate professional has all of the data available to compare with your home, and knows how factors such as location, school districts, and home upgrades impact the final price.
However, knowing your home’s fair market value doesn’t mean it is the price you will get if you sell your home. The number of people interested in buying and negotiations with a prospective buyer will impact the final sale price. Still, an accurate market value will give you a good starting point, and a Realtor can help you understand any variables that may come into play.
“A qualified agent can help the seller determine the best price and strategy,” Earl said. “Ultimately, the price is up to the seller.”
Hometown Lawrence is the Lawrence Journal-World’s real estate resource section and website. For more information on area real estate listings, go to HometownLawrence.com.