“What is my house worth?” is usually the number one thing on your mind when you are trying to sell your home.
Depending on the length of time you have owned your property, it may now be worth significantly more than when you purchased it. Because of this, it’s essential to arm yourself with the correct knowledge when pricing your home. This way you can get the best deal possible.
Here’s what you need to know about discovering the true value of your home:
What is a Property Value Assessment?
A property value assessment is an annual inspection done to your home by an official for local government entities. It determines your home’s value for tax purposes.
Property assessors examine a number of factors about a specific property. Then, they let the local government officials know how much tax to levy against a home based on its perceived worth.
How to Assess the Value of Your Home
There are a number of different ways that assessors determine the value of a home, but the three most common ways are listed below:
1. The Sales Evaluation
By using the sales evaluation method, an assessment agent determines the perceived value of your home by researching the local housing market.
The agent looks for trends in the market and sets a valuation for your home based on what similar properties are selling for in the immediate area.
2. The Cost Method
If an assessment agent chooses to use the cost method to determine the taxable value of your home, he will determine how much it would cost to rebuild your house from scratch. This means that if your home is older, the value might be less than you think, simply because of depreciation.
Remember: when using the cost method, the assessment agent is only concerned with the house, not the things inside of it. This means that the final number might be lower than you think.
3. The Income Assessment
The third most common way to discover the taxable worth of your home is for the assessor to understand any income potential that your property has.
This means if you rented the home out, how much would you be able to make in the current market?
To arrive at his final estimate, the agent will deduct any recurring expenses that would detract from your gross income, like homeowners insurance, property taxes, and general home maintenance.
What’s the difference between Assessed Value and Fair Market Value?
If you receive your home’s assessed value and are not happy with it, it’s not the time to panic. The next step is to work with your Realtor to determine your home’s fair market value.
A very general definition of fair market value is this:
What would a knowledgeable, willing, and unpressured buyer be willing to pay to a knowledgeable, willing, and unpressured seller in the current market for the property in question?
The assessed value of a home is very cut and dry, but the fair market value of a home is up to a lot of emotional interpretation.
How Do You Determine Fair Market Value?
Determining your home’s fair market value is the final step is answering your original question “what is my house worth?”
Once the assessment agent makes his recommendation, it is time to take his suggested number and work with your real estate agent to dress it up.
Now is the time to consider all the things that the straightforward assessor could not. For example, the assessed value of your home may consider that it’s in a great neighborhood with consistently high test scores.
But it might NOT consider that you live within walking distance to the elementary school (so parents can save hours of waiting by avoiding the carpool line two times a day) and is mere moments from the middle and high school bus stop.
The official assessment of your home might consider that it is in a nice area of town without much crime, but what it won’t include is the fact that your home also has state of the art security cameras installed and a gate across the front of the of the driveway as an extra deterrent.
It is small touches like these, along with small cosmetic changes like a fresh coat of neutral paint and flowers in the front yard, which can really appeal to potential buyers. These changes give your home the boost it needs to sell for the best price possible in a competitive market.
Need someone who can help you get the best price for your home? Work with one of our top local agents! With great reviews and a flat rate price, you’ll wonder why you didn’t go with Clever sooner. Call us today at 1-833-2-CLEVER or fill out our online form to get started.