Have you ever wondered why the market value of your home differs from what your bank appraises it at? Or what value is being used to set your property tax bill? It's easy to be confused about the different valuations being used but knowing a home's value or worth in the real estate market will help you get a fair price.
There are generally three ways to determine the value of a home: through a Comparative Market Analysis, a professional appraisal or an assessed valuation. A Comparative Market Analysis (CMA), can determine a reasonable listing price for your home. When I prepare a CMA, I consider a number of factors including the home's size, age, location and amenities. I also research the list prices of properties that have sold recently in your neighborhood.
An appraiser determines the market value of your home by looking at the supply and demand of like properties in the area, comparing your property with others that have recently sold, determining the amount of money it would take to replace your home at current material and labor costs and/or determining how much income a property would produce (this last approach is used more often for rental property, apartments and commercial property). Lenders frequently require a professional appraisal upon which to base your loan amount.
Local governments also perform independent appraisals to determine your home's assessed value, available on public record, so that your property is taxed fairly.
When comparing the CMA and the appraised values, don't be surprised if they do not match. There are a number of reasons that these differences occur.
The "market value" determined by the appraisal can be different from the "market price" determined through a CMA. In essence, the appraisal amount reflects the cost of replacing your home. But the goal of the CMA is to determine a price that someone will pay for your home. The sale price can be much different from the appraisal value.
Also, the real estate market is constantly changing. A home that was worth $100,000 last year may be worth more or possibly less next year. Meanwhile, all city and county property assessments are assigned an effective date, valid for that particular point in time. The more time that has passed since the appraisal, the greater the possibility for disparity in the values. For example, some governments appraise properties only once every four years.
If you need help determining the value of your home call me to discuss the current real estate conditions that affect the market price of your property.
All The Best,