Knowing the market value of your home is important whether you’re selling your home or not. Being aware of your home’s market value will help you make educated decisions regarding future changes you’d potentially like to make to your home as well as refinance decisions. Knowing how your home stacks up against the rest is an invaluable tool and possibly the number one question our listing team receives.
FIRST THINGS FIRST
What is “market” value? Market value is what your home would sell for in today’s market. It is important to note that sometimes market value and the price in which you’d list your home don’t meet eye to eye. Your listing agent will discuss this with you if/when you’re ready to list your home.
HOW NOT TO DETERMINE MARKET VALUE
Cost per Square Foot
The cost per square foot method is often used by real estate agents who aren’t familiar with the area or the community. It’s a fairly simple mathematical method, but unfortunately, it doesn’t take into account all of the things that make a home unique.
Method: Sales Price/Number of Square Feet
Result: If the recent sales in the neighborhood don’t have the upgrades included in your home, you could possibly short yourself 10’s of thousands of dollars by listing too low.
Some homeowners will live and die by their Zestimate®, most likely die when they discover their home is worth $25,000 less than what Zillow says.
Why is Zillow so inaccurate? Simply because Zillow doesn’t have any idea what’s happening in your real estate market, the condition of your home, the upgrades, or your neighborhood’s amenities.
Automated Valuation Models
This model is similar to the Price per Square Foot method in that it uses recent data to determine market value. It sounds logical, but again, the condition of your home, the upgrades, and your neighborhood amenities may or may not have been taken into consideration when determining the value. Also, the data used may not be entirely accurate since we don’t know when it was last updated.
THE WINNER IS…
Comparative Market Analysis
Commonly referred to as a CMA in the business, a comparative market analysis is arguably the best way to determine the market value of your home. It is a detailed report in which analyzes comparable (the keyword here is comparable) sales in your area over the past 6 – 12 months.
A quality CMA will use the following to help determine your home’s value:
- Properties with similar square footage
- The number of bathrooms
- The number of bedrooms
- Similar upgrades like granite counter tops, a master ensuite, or a pool/spa
- Same approximate area or neighborhood/community
- Similar style of home/builder
A professional REALTOR® can offer you a more detailed analysis by visiting your home. This is important if your home features special upgrades like a chef’s kitchen, mosaic tile or marble accents, bamboo floors, or a dual master suite, etc. Any one of these things will increase the value of your home. This is of invaluable importance if you’re considering a refinance or if you’re selling your home.
- Avoid Zillow at all costs.
- Use a professional REALTOR® to help you get an even more accurate value of your home.
- Use the analysis to make an educated decision for you and your family.
Click here to get a free, personalized, custom market analysis of your home or call 702.625.3202 to make an appointment for an agent on our team to personally evaluate your home.