There are many owners who buy their house and later on decide to sell it, and there are a number of reasons why. Some want the opportunity to upgrade to a new and bigger house. There are sellers who look forward to making a profit after paying off the mortgage. Some homeowners sell because of job relocation. And there are sellers who just aren’t satisfied with their house anymore.
No matter what the reason is, in order to sell you need to first estimate the real value of the house. There are several ways to determine how much your house is worth, including several factors that may affect your house’ worth based on current market conditions.
Calculating Home Value: Factors to Consider
As I mentioned earlier, there are many elements to be considered when calculating the value of your house. Do not confuse these factors with the actual house value:
- Property tax assessment – Your tax assessment could be lower or higher than the current market value of the house, depending on the jurisdiction that covers you.
- Homeowners insurance value – You have to remember that your insurance estimate only covers the cost of replacing the house and the things in it, not including the land.
- Mortgage balance – This is the reminder of your total mortgage loan.
- Neighborhood price – Even if your house has the same size, design and layout as the house next door, you can still have different home value.
- Purchase cost – The real estate market is a dynamic market, with prices going up and down in a span of days, even minutes. Comparing your home worth with the amount you bought it for would be erroneous.
- Desired value – Sellers have the prerogative to put their house up for sale at the price that they want. The only problem here is whether the buyer would think the price is fair based on the actual value of the house. If your price is higher than what your home is actually worth, you’ll find it difficult to find a buyer and you may not even sell the house. You need to consult with a realtor to make sure that your asking price is relevant to your home’s real value.
Comparative Market Analysis
A comparative market analysis is done by a certified realtor to help home owners calculate how much their houses are worth. The realtor employs a thorough investigation of the current market trends and prices that affect the selling price of the house. You also have to take note that the lender will require an appraisal before agreeing to sell the house.
When realtors conduct a comparative market analysis or CMA, one of the first things they look into is the list of recently sold homes (and those not sold) similar to your house for the previous 3-6 months. This way, the realtor can gauge what the trend is and how your house will fare in the property market. Another factor to consider is the condition of the house. Is it well-kept or worn down? Does it look older or are the amenities upgraded and modernized? These things could increase or decrease your home value.
To better understand how the realtor has come up with the estimate of your house value, you can ask him or her to explain what it means. You can also do your research and look at listings online for comparison. Most important thing to remember – don’t be greedy. Set a fair price and you’ll find it’s easier to sell that way.