Tips On How To Get The Right Market Value Of Your Home
Getting the right market value of a property is important whether you are planning to sell or buy a home. Only by knowing the right market value can you judge the right price for a home. Some people don’t understand what market value is and end up selling their homes at a loss or paying too much when buying. If you wish to make an intelligent decision when buying or selling property then it is crucial to fully understand what market value is.
One of the first things you should understand is that the tax assessed value of a home is not its market value. The assessed value is calculated by the tax authorities as being the value that should be taxed. Whereas, the market value of that property is calculated by professional realtors, after taking into consideration the state of the real estate market, recent sales of similar property located in close proximity of the property being sold, current availability of similar property, and other conditions. These two values are completely unrelated and can be vastly different if tax assessment has not been done recently by the local government.
A realtor has to factor in many things when arriving at a market value that tax authorities seldom consider.
For example the neighborhood has nothing to do with assessed value and everything to do with market value. A good neighborhood means higher market value. The location of the property is equally important. The property is assessed based on things like proximity to business districts, highway, town center, schools and so on. Taking a line from the hotel industry, location is everything.
The next thing is the condition of a home. Newer homes have higher market value as they are in better physical condition. Older homes are typically in need of repairs, such as the roof, outdated plumbing, electrical fixtures etc. and this lowers their market value. The more repairs needed the lower the market value will be.
The realtor will collect all such data and then set up comparisons with similar homes in matching neighborhoods. This comparison will include recently sold and homes currently on the market with a similar market value. Based on all this data the realtor will then calculate the right market value of the home. This value is typically good for around 3 to 4 months and then should be recalculated. In case your home is not sold within this time then it may be because it was overpriced. If it sells quicker than expected, then it may have been under priced. The under pricing is not an issue because realtors naturally aim for the highest possible value they can get because it increases their commissions. It is always possible that the right buyer will contact the realtor at just the right time.
It is always a good idea to contact at least 2-3 realtors and ask them for a free market analysis of your property. This way you can compare their results for yourself. Note that the free analysis is not the actual market value, but a very good approximation. Quite often you will be given a range as to the market value. To get a more precise market value, you may have to pay one of the realtors, a fee, as this report will require more work on the realtors’ part.
As you can see understanding the market value verses the tax assessment value of your home is not rocket science. But it can save you money and time when selling your home.
