House prices seem to have been on a bit of a roller coaster ride in recent months. Prices looked like they were going to fall, then they rose, and then when more bad news about interest rates came along, they kept going up.
Generally speaking, there are three methods people use to figure out how much a property is worth: fair market value, appraised value, and assessed value.
Fair market value is a measure that asks how much your home is worth when compared to other properties in the area. It’s usually a matter of considering how many bathrooms, bedrooms and square feet it has, and then working out a price based on what other properties in the area have gone for.
Appraised value is a valuation done by a licensed appraiser – somebody with the necessary skills to work out how much a property is actually worth. Again, they’ll consider the size and layout of the property, but will also include an element of personal judgment in the price, perhaps knocking off a few thousand here, or adding a couple of thousand there, depending on the condition.
Assess value is the value ascribed to your property by local authorities for tax purposes. It determines how much you pay in property taxes. Assessed values tend to be quite conservative and don’t usually rise at the same pace as the rest of the market. Therefore, you shouldn’t rely on assessed values to figure out how much your property will be worth when you sell it.
In the following sections, we take a look at some of the methods you can use to find out how much your home is worth.
Use A Value Calculator
Some online housing firms use home price value calculators to try to determine how much a property would be worth if you sold it right now. These take into account data from other home sales in your area to give you a value. The number that pops out the other side is an estimate of what a buyer is likely to pay, given local market conditions.
Calculators, though, are quite limited. While they take some factors into consideration, they are not particularly good at placing a price on other factors, such as your home’s views, upgrades that it may have had, and its curb appeal. All it can go on are similar properties in the area.
Ask A Real Estate Agent
Another option is to go to local real estate agents and get them to value your property. They usually complete what’s called a “comparative market analysis”, similar to a calculator, but in more detail.
Quality real estate agents drill down and try to find out more about your home. They look carefully for things that could raise or lower its value, compared to the trend.
They may also hire a professional appraiser on your behalf. These people can be helpful when you’re consulting with a mortgage lender and want to work out how much equity you have in your home.