Whether you’re selling your home or just curious, knowing its fair market value (FMV) is essential. While online valuation tools and real estate agents provide valuable estimates, an appraisal from a licensed appraiser is usually required for mortgage lenders and county tax assessments.
Many factors influence FMV, including local real estate trends, the housing market, and a home’s condition, size, age, and location.
Comparable Home Sales
The recent sale prices of comparable homes largely determine a property’s value. Real estate agents and appraisers use comparable sales to estimate a home’s value before it goes on the market. Comparable sales are properties with similar characteristics, such as location, size, number of bedrooms and bathrooms, age, and condition. Ideally, comparable homes should be located within a one-quarter to a one-half-mile radius of the subject property. This approach provides a more accurate resale valuation.
To find comps, real estate agents use a site that displays MLS listings or search through local listings in newspapers and online. They look for houses that have recently sold, preferably in the last three months, but if there aren’t enough recent sales, they may consider homes that were listed for sale but didn’t sell or were pulled off the omgblog market.
Once they have their list of comps, they adjust the final sales price by adding or subtracting amounts based on different characteristics of the two properties. This helps ensure the comps are as similar as possible to the subject property and that the appraisal will reflect the estimated home’s value. Otherwise, a mortgage lender might refuse to lend money on the house, or the contract with a buyer could fall through. The goal of the adjustment is to arrive at an estimated home value that matches the seller’s target price.
Location
One of the critical factors that affect home value is location. Real estate is a hyper-local industry, so home prices reflect joint local sales and trends. Whether you’re a prospective buyer or seller, it pays to stay up-to-date on upcoming developments in your area and how they may impact the market. For example, adding a new school or significant local employer can increase your neighborhood’s perceived value and make homes there more desirable to buy. Conversely, if an area suffers from job losses and business closures, it can have the opposite effect.
It’s also important to consider a home’s proximity to nearby amenities, such as grocery stores, restaurants, and entertainment venues. Typically, buyers want these conveniences within a 5-to-10-minute drive. Keeping these things in mind if you’re selling a property will help determine how much to ask.
Of course, there’s nothing like visiting a neighborhood at different times of day and on weekends to understand what it’s like to live there. Ultimately, your personal preferences will play a significant role in which home you buy or sell. But the key is choosing a home in a location like homes for sale in Iowa Colony, TX, that you’ll enjoy for years to come, regardless of how it will affect your resale value.
Property Features
There are many definitive ways to determine a value, but certain features tend to have the most significant impact. These factors include local real estate trends, the state of the housing market, and the home’s location, condition, and size.
A professional appraisal is the best option to learn more about a specific property. This is typically required for buyers seeking financing through a bank. However, sellers can also benefit from an appraisal before listing their. This will give them a better understanding of the fair market value (FMV) and help them set an accurate list price.
Using an online valuation tool or pulling comps in your area is another good option, though the results may not be as accurate as those of an appraiser or real estate agent. When evaluating comparable properties, try to find those that have similar characteristics to your own, including the number of bedrooms, bathrooms, square footage, and year built.
Other features that can affect property value include exterior curb appeal, architectural style, water facility and sewage system, and driveway and sidewalks. In addition, many buyers are drawn to the potential for renovations that can increase floor space, add a garage or additional bedroom, or upgrade kitchens and bathrooms. Therefore, look for properties with these upgrades in good condition and note how much they have been updated.
Home Improvements
Several home improvements can help boost a property’s value. However, it is essential to choose wisely. Only some upgrades will pay for themselves if you decide to sell. For example, turning a bathroom into a spa-like space may not increase your return on investment. But installing new gutters or fixing a leaky roof could.
Online tools like valuation estimators can provide you with a quick estimate of your home’s market value. They analyze comparable sales, property features, and other factors. However, they sometimes need to consider factors that affect sale price, such as time of year or competition in the market.
Another way to determine your value is to get a professional assessment. A comparative market analysis (CMA) provides an agent’s evaluation of your home and the local market, providing you with a list price estimate for selling purposes. Some real estate agents offer this service for free, but they may also hope to earn your listing business.
Other options for determining your home’s value include having an appraiser examine it and using the Federal Housing Finance Agency’s house price index calculator. These tools are more scientific than an AVM but can be expensive.
