Whether it’s a car, garage sale items or you’re selling on websites such as Ebay, successfully selling “stuff” has one major requirement: you need to know how much it’s worth.
After all, price an item too high and it most likely won’t sell. Price it too low and you’ll lose money on the deal.
The same holds true for houses, but there is a lot more money involved and the stakes are far higher so you need to be assure you understand the home value of what you are looking at.
There are several different home value models, depending on the purpose for which the home value needs to be ascertained. Let’s take a look at these and the differences between them.
The Assessed Home Value
Homeowners can’t get around paying property taxes and they’re based on your assessed home value. Your county or other municipality official, most commonly known as the “assessor,” will come up with the number for this evaluation.
He or she will use many of the same resources as a professional appraiser, from public records to recent sales. After deducting any exemptions available to you, the assessor multiplies the value by the assessment rate for your municipality to come up with the taxed home value.
You’ll notice that the assessor’s value is often quite different than your market home value. Again, this evaluation is for tax purposes only and does not express your current market home value.
The Market Home Value
The market home value is based on what a buyer is willing to pay and a seller will accept. It is reflected in the recent sales prices of similar homes, or “comps,” short for “comparable homes.”
Most home sellers rely on the skill and experience of their real estate agent to determine their home’s current market home value. And, although they don’t call their determination an “appraisal,” real estate agents use many of the same valuation techniques as appraisers.
They will base their determination on the following, when comparing your home value to the comps:
- The size of the home
- Age of the home
- Condition of the home
- Location of the home
- Special features
Then, if the agent is familiar with your neighborhood, he or she will use any knowledge of recent home appraisals in the area to help narrow down a price for your home.
This is what knowing the market’s home value does for homeowners: it helps them determine a competitive price for their homes.
An Appraised Home Value
The appraised home value is that which is determined by a professional home appraiser. Typically hired by a buyer’s lender, this is the value determination that can make or break a home sale.
The appraiser will visit the home, taking measurements and notes. Back at the office, she will use many of the same techniques that real estate agents use, with the addition of public record information and other assistance.
Whether or not your agent’s evaluation matches that of the appraiser depends largely on current market conditions. In a recovering market, such that we saw after the recession ended, it may be challenging to pinpoint value.
When purchasing a home, it’s a smart move to look at a home’s property tax burden. But, for sellers, this type of home value means little. It’s the market home value and the appraised home value that are important.
If you are looking to get your home value report, click here. Still have questions? Fee free to reach out to me.