It’s no secret that home prices have soared over the last couple of years. If you’re thinking about putting your home on the market in 2022, you’re probably wondering how much you can get in return and where to set your asking price.
Determining what your home is worth is fairly easy; however, keep in mind there are multiple ways to measure a home’s value. Some methods are based on nearby home sales, while others exist to assess property tax liability. As a result, it’s important to understand the different valuation methods, how they’re calculated, and how they’re used before selling your home.
Understanding Home Valuation Methods
When trying to figure out how much a home is worth, remember there are three different methods of valuation: assessed value, market value, and appraised value. Each one has a different purpose. The assessed value is primarily used for tax purposes. Market value should be used as a guideline when establishing your asking price. However, if there has been a drastic shift in the market or your home has unique features, you may want to consider paying for an appraisal.
Below, we’ll discuss the best ways to determine your home’s value under each valuation method:
Determining Market Value
Market value is based on the current state of the real estate market as well as nearby similar home sales. It’s most easily established using recent local real estate transaction data. Market value is different than appraised value, because it’s more heavily influenced by what the market is willing to pay rather than what the home is actually worth. There are two common ways to determine your home’s market value:
- Use An Online Home Value Calculator
Most major real estate websites offer home value calculators that leverage dozens of data points including recent home sale transactions, tax assessments, home sizes, etc. to estimate property value. Keep in mind, these calculators only provide estimates and this information should only be used as a quick reference. Information from these calculators alone should not be used to set an asking price. The Zillow Zestimate calculator or the Realtor.com My Home calculator are a couple of examples of good home value calculators. - Obtain A Comparative Market Analysis Report
Your neighbors’ recent home sales can provide valuable insights into the value of your property. Real estate agents often leverage comparative market analysis (CMA) reports for data on recent local home sales. These are also referred to as “comps”. The reports look at recent home sales of similar properties within a one mile radius of your home. The data contained within these reports can be incredibly helpful when determining your home’s market value because it’s a good indication of what the market is willing to pay.
Determining Assessed Value
Assessed value is primarily used to estimate property taxes and is determined at the county and municipality level. The higher your home’s assessed value, the more you’ll pay in property taxes. The value is determined by county auditors who conduct periodic assessments of local residential properties. It’s often calculated with an algorithm that considers numerous factors including market value. However, because properties are only assessed every year or so, assessed values tend to be lower than market values and appraised values.
It’s usually easy to find out your home’s most recent assessed value. You can actually just check your county or municipal auditor’s website.
Determining Appraised Value
An appraisal is considered to be the most accurate way to determine your home’s value. During an appraiser, a licensed home appraiser will examine every part of your home during a one to two hour walkthrough. Once they’ve collected enough information, they’ll use their observations to calculate your home’s appraised value.
An appraisal is not required to list your home, but it’s an excellent way to set a realistic asking price, especially if a CMA report isn’t helpful or if there aren’t any similar homes nearby. Keep in mind, if your buyer is financing their home purchase, their lender will likely also require an appraisal before closing.
Your home is your largest investment and understanding its value is critical for making smart financial decisions and determining the best time to sell. If you’re wondering “what is the best strategy to sell my home in this market?”, contact us at Palmetto Realty today. Our team can help you earn the best sale price.