Selling your home is a significant financial decision, and you don’t want to get shortchanged. However, pricing your home too high can stave off demand and keep your listing on the market longer. You will still owe mortgage payments, property taxes, and other homeownership costs as you look for someone to buy your home. Knowing your home’s value before going into negotiations will help you set an optimal selling price. We will share some strategies you can use to estimate your home’s value so you set the right price.
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Different Types of Home Valuation
Homeowners can use several valuation models to assess their homes and get the right price. Each valuation method has different factors that influence the estimated value of your property.
Fair Market Value
The fair market value model focuses on the real estate market. Buyers and sellers will look at the national and local markets to assess a fair market value for the property. Of course, buyers and sellers will have different opinions of fair market value, but the type of market can help dictate the outcome. For example, buyers can create downward pricing pressure during a buyer’s market, while sellers can comfortably raise prices during a seller’s market. A buyer may also look at your home’s purchase history and see how much it sold for during its previous purchase.
Appraised Value
You can hire an appraiser to review your home and assign a valuation. Appraisers consider the property’s current condition, location, features, and other factors. An appraiser will assign a higher valuation to the home with two beds and two baths versus a home with two beds and one bath, assuming everything else is equal. Any structural issues such as an outdated roof will hurt your home’s appraised valuation.
Assessed Value
Your local municipal property assessor comes up with a valuation for your home every year. Municipalities have different approaches for calculating an assessed value, but they revolve around comparing your property to others in the same location. It’s better to have a low assessed value since this valuation determines how much you owe in property taxes. A higher value will increase your property taxes.
Main Factors That Can Affect Home Value Estimates
Buyers look at several home qualities to determine their initial offer. These factors will impact how people view your home and what price you can get for your property.
Your Neighborhood
A real estate property’s location is a critical component that drives value. A luxurious home can stay on the market for years if it’s in an area with a high crime rate. Potential buyers will look at your immediate neighbors, school systems, parks, amenities, and other parts of your area.
Your Home’s Age
An older home can have more issues and present more problems in the future. Newer homes use more advanced technology and can command higher prices than their older counterparts. In addition, new homes tend to have more energy efficiency and other perks than older homes.
Your Home’s Condition
A home that requires less work can sell for a higher price in the market. However, if your home needs several repairs, you will have to charge a lower price. Some homeowners take their properties off the market and do repairs, but you may need to sell your home quickly. If time isn’t on your side, you can lower your home’s price to reflect any structural issues.
Your Home’s Size
A larger home will sell at a higher price than a smaller home, assuming everything else is the same. Having additional rooms creates more flexibility instead of the cramped feeling you can get from a less spacious home.
Submit an online application form to inquiry about Angel Oak Mortgage Solutions financing options.
Older homeowners can get peace of mind and added financial security with a reverse mortgage from AAG.
Buy a home or refinance your existing mortgage with Zero Mortgage.
Your Home’s Improvements
Any recent improvements will improve your home’s valuation. Recent improvements are more durable since they have gone through less wear and tear. Improvements to important parts of the home, such as the roof and kitchen, can lead to higher appreciation.
Ways to Estimate Your Home’s Value
Estimating your home’s value helps you set a fair asking price that prevents you from leaving money on the table and doesn’t scare away every prospective buyer. Homeowners can use several strategies to estimate their home’s value and feel confident about their asking price.
Use a Home Value Estimator Tool
A home value estimator tool makes it easy to see an estimate in minutes. You can type your home address in the home estimator tool and receive a valuation. You shouldn’t rely on a home value estimator tool, but seeing this number will give you a valuation to consider. A potential buyer may use a similar home value estimator tool to determine your home’s value.
Conduct a Comparative Market Analysis
Homeowners can look at properties in the area that recently sold on the market. You can compare the prices of similar homes in your neighborhood and review each property’s features. Some homeowners look at square feet to assess their price point. If a 1,500-square-foot home in the neighborhood sells for $500,000, it translates to $333.33 per square foot. You can use that metric to calculate an $833,325 selling price for a 2,500-square-foot home. Having additional features such as a pool can increase your price even more.
Visit Your County of Municipal Auditor’s Website
You can use this website to find the assessed value of your home. Some homeowners list a price that matches this valuation model, but others prefer to set the price slightly higher. The seller can present the lower assessed value as an advantage since the new owner would not have to pay as much property tax.
Check the FHFA House Price Index Calculator
The FHA House Price Index has helped homeowners track current and previous trends in single-family home prices since the 1970s. The FHFA has tracked this data across all 50 states and over 400 cities. In addition, you can use the FHFA House Price Index Calculator to gauge how much your home could be worth.
Get a Professional Appraiser
An appraiser will examine your home and assign a valuation. Homes with modern improvements, great features, and few to zero structural flaws will stand out more. Value is in the eye of the beholder. You can get two different price points from two different appraisers.
Look at Recent and Comparable Home Sales in Your Area
You can look at your neighborhood’s housing market and see how much homes have sold for in the past. Finding homes with similar perks, square footage, and other features can give you an idea of how much the right buyer may pay for your home. Homeowners can also analyze homes on the market to see current price points.
