Obtaining the Market Value For Your Single Family Home

If you are considering putting your single family home on the market or are looking to buy a home already listed, likely you are familiar with the term “market value” and how it pertains to home prices. If you aren’t certain what the term means then it is imperative that you understand what market value is otherwise you could be selling your home at a price that is too high or paying too much for a home that isn’t worth the asking price. For simplicity’s sake, let’s examine how you can obtain the market value for your single family home.

Some people confuse a home’s assessed value with its market value. The assessed value is what the tax authorities have determined to be the home’s worth while the market value is a price determined usually by a realtor who examines recent home sales and current market listings and conditions. These two values could be far apart especially if a tax reassessment hasn’t been accomplished in awhile.

When a realtor arrives at a market value figure she bases that number on the answers she obtains to the following questions:

What type of neighborhood is the home in? Is it near the central business district, on a highway, or far away from the town center? Location, location, location is a familiar term and it is a chief determinant in crafting market value.

What is the home’s condition? Is it new or older? If older, has the home received proper maintenance or is there work yet to be done? A home needing repairs will have a lower market value than a home that is in pristine condition.

Once these questions have been answered, the realtor will pull up comparables [comps] of similar homes in the neighborhood. These price comparables include homes that recently sold as well as homes currently on the market. From there, she will come up with a price that is best suited to move your home within a reasonable amount of time, usually a 1 to 3 month period.

If the home doesn't sell within that timeframe, then likely it is overpriced. If it sells very quickly, it could be that the home was under priced. However, realtors are trained to seek the highest possible price when determining market value, therefore a quick sell isn’t always indicative of a low price. Quite simply, the right buyer at the right time may have stepped forward to purchase the home.

If you are planning to list your home in the near future, contact at least three realtors and ask them to give you a free market analysis. This analysis will include their market value price which is usually not a specific price, but a rough estimate based on formulas they use. For example, a realtor may say your home’s market value is between $329,000 and $349,000, a bit of a spread but information you can use and compare with the other market analysis’s.

Finally, when you are ready to list your home for sale, go with the market value that has been recommended by the realtor you have selected. The price can be dropped quickly if no interest is made within the first week or two, but likely your realtor’s market value price is very close to what offers are being tendered for your home.