Before getting into how to determine the market value of a property, let’s answer the why first. Whenever insurance agencies set insurance premiums or the tax assessor calculates property taxes or the lenders work out an equity loan or refinance your home, they need the fair market value of your house. The market value of your property is the rate of your home after placing it on the open market for a short period of time. Calculating or determining the market value of a property has no formula, but the steps mentioned below can help you estimate the market value accurately.
Research Your Locality for Real Estate Sales Data:
For doing this, search for a website or resource from where you can gather the date, which corresponds to the real estate sales that happened in your area recently. Some of the resource, which can be used, are websites of any realtor who functions locally, tax record websites of your locality or a national record keeping website or office.
Get an Estimation of the Current Market:
Find three homes similar to your home that have been sold within the last six months nearby. Looking at houses currently for sale to get an idea of what the seller is asking and what the buyer is willing to pay is also important to get the current market value of your home. The sold houses are known as your Comps(Comparable Sales).
Calculate Market Value of Your Property:
Take a note of the sales price of the three homes and calculate their average. After these steps, adjustments are done. Adjustments are the amount to be added and deducted according to the upgrades and downgrades or extra amenities or deductions done on your house as compared to the sold houses. For example, if your home has a garage, but others don’t, you need to add the garage value to your home and in case your home doesn’t have a garage and others do then you need to subtract that value from your house value. Take help from a professional to determine the value of the adjustments you need to do in your home.
As all the data to get a general idea of the market value of your house has been collected, you can easily calculate an estimation of the market value of your property. This is just a rough estimate, so consulting a real estate professional before getting into any sales is always a smart choice.