Knowing your home’s market value is extremely valuable. It can guide you in making the decision to sell or refinance. It will also help you in estimating property taxes and insurance premiums.
A professional appraiser, as well as your Realtor, can provide you with a close estimate. However, if you want to regularly keep track of your home’s market value, it’s probably best to do the estimate yourself. The process is quite simple but you need to do your homework to get accurate results.
Here are the steps in estimating your home’s market value:
Research on recent local sales
Look for information about the prices of homes that recently sold in your area. Make sure the homes are comparable to yours, particularly in the
- Location – The homes must have the same proximity to the area’s amenities and transportation options, and the streets must have similar features
- Lot size
- Floor size or square footage
- Number of rooms
You can find the information you need from various sources, including:
- Real estate websites
- Local newspapers
- Real estate agents who provide this information to their clients
- The office of the local assessor
- Town or city website or office
Analyze the information
Once you’ve identified at least three similar homes, create a grid detailing the sale price and features of each home, including yours. You then need to adjust the sale prices based on the superiority or inferiority of a home compared to yours. The features that determine this include:
- Lot size and square footage
- Number of rooms
- The condition of the home
- Parking and other amenities
If you think that your home is superior to a sold property, adjust the value by adding an approximate amount to the sale price. Likewise, if you think another property is better than yours, deduct an appropriate amount from that property’s sale price.
This example from the New York State Department of Taxation and Finance shows how a comparative grid works:
The “Adjusted Sales Price” reflects the approximate price each property would have sold for if it had exactly the same features as the subject home. Note that the sale price for Property #1 was increased by $30,000 because it was in an inferior location compared to the subject home, while the price for Property #3 was reduced by $12,000 because it had more baths than the subject home.
Compare and average
Compare the adjusted prices you arrived at for each home – the difference between these figures should be quite small. Get the median or average figure and use this as an estimate of your home’s value.
Common mistakes to avoid
In estimating your home’s market value, watch out for these common mistakes that could lead to inaccurate results:
- Comparing your home to properties that are still on the market. The final selling price for these homes may be considerably different from their current listing price. Choose only properties that have already sold.
- Comparing to homes that are too different. Always consider the features listed above in choosing properties for comparison.
- Letting your emotions cloud your judgment. It’s very easy for homeowners to think their property is worth more than it actually is. Be as objective as possible in making your estimate.
If you need a professional assessment of your home’s market value, we will be happy to help. Give us a call at 865-588-1234 or contact us at this page.