One of the most confusing things for any homeowner to understand is how much their home is actually worth. Fair Market Value, often abbreviated as FMV, is the value that an asset (like your home) will be sold for under normal market conditions. It is a primary tool in determining the price of a home.
What exactly determines the fair market value of a home? We spoke to some industry experts who explained how they determine the fair market value of homes in the market.
We have all heard of the importance of location, and it is an important factor in determining the exact value of a home. Maybe your house is a tiny 2: 1, but it’s in one of the most desirable neighborhoods in the city. This is very important. On the other hand, even a spacious house with lots of upgrades will hit FMV if it’s on a busy freeway or next to a noisy industrial park.
“So many factors determine home value, including location, community, schools, and even access to services,” said Andrew Roderick, real estate investor and CEO of CreditRepairCompanies.com. “It’s important to consider everything in the immediate area and see it as something that can have a positive or negative effect on the value of the property. You should also be aware of changes in the neighborhood, such as: B. New buildings and even new businesses. “
The value of a home is influenced by its overall condition and characteristics – from a buyer’s point of view.
“The age of a home, its features, and how it works can add or decrease its value dramatically,” says realtor Heather Tindall Robillard of RE / MAX Tri County. “Sellers are mistakenly viewing their home through rose-colored glasses instead of making an unbiased assessment of its condition and features.”
Robillard urges homeowners to ask objective questions such as: B. “How modern are my appliances” and “Does my house have a strange layout?” Older roof systems, HVAC, and even plumbing can also add to lower home value, even if those things are still working fine.
If you plan to be staying in your house for a while, and the budget allows it, take some time to update old or broken systems and equipment. This could mean more of an investment now, but it also increases the overall value of your home and how much you can sell in the future.
Running Comps (Wait, What Are Comps?)
To determine the price of a home they want to sell, real estate agents use the Multiple Listing Service, also known as MLS. It enables you to compare current asking prices and current selling prices of homes in a given area.
The rest of us log on to sites like Trulia and Zillow to see the real estate events in our neighborhood. These websites are not updated as frequently and do not show as complete a picture as the MLS. However, they do contain historical data that can give homeowners an idea of how much their home is worth.
Here’s exactly how to use these websites if you’re curious about where your home is:
“Head over to one of these websites and check out similar homes (as close to yours) that have been sold in the area,” says Brittany Hovsepian, owner of The seasoned home buyers. “Start with homes that have been sold in the last three months and then expand to six months or a year to keep track of what those homes are being sold for.”
Be sure to pick homes that have similar numbers of bedrooms and bathrooms, as well as square feet and acreage. This way you will get the most accurate picture of what truly comparable homes are being sold for.
Objectivity is important
The difference between what a homeowner thinks their home is worth and what a real estate agent determines is its fair market value, which is due to objectivity.
Everything about yours have Home may seem idyllic to your eyes, it’s hard for you – whoever brought your baby home to this house and personally painted each room – to see what potential buyers see. Note: don’t break a sweat.
“The most common mistake we see is that people think their home is worth more than it is,” says Hovsepian. “This is especially true for people who have lived at home for a long time and have memories that tarnish their judgment. It is difficult, but necessary, to remove emotion from the equation when determining the value of your home. “
This article originally appeared on www.thepennyhoarder.com