Good question! For homeowners, and especially homesellers, the value of a home is an important piece of data that helps determine a number of other factors, including the list price. However, the question “How much is my home worth?” isn’t as straightforward as it seems, and the answer depends on whom you ask and why you’re asking.
There are several different terms that can be used to refer to your home’s value, and sometimes clients get confused about which term means what. To add to the confusion, the numbers might vary a great deal, but in context, they’re usually still accurate.
To clear up any misunderstanding, I’ve rounded up some of the most common terms used to describe home value.
Market value or fair market value is the likely selling price of a home on the open real estate market. It’s important to note: This isn’t the value you place on your home or the value your neighbor (or family member or friend) places on your home. It’s called “market value,” because it’s the value the market places on your home based on several factors, many of which have more to do with the local economy and real estate market than the house itself.
Your home’s assessed value is the value your locality’s tax assessor places on your home. Its sole purpose is for assessing local real estate taxes. The assessed value is a good place to start when trying to value your home, but because assessments are performed annually, at most, they often do not keep up with changes and trends in the local real estate market.
In Virginia, an appraisal must performed by a licensed professional. Appraisals are most often performed during the mortgage process and help determine the limit a bank or mortgage company will lend for the purchase of a particular home. An appraisal is also defensible in court, which means it can be used in cases where a home’s value needs to be determined, such as a divorce or inheritance.
Which one can I find on Zillow (or some other big-brand real estate site)?
None! Zillow valuations, and those of other third-party sites, are flawed, often because of the properties they consider comparable. According to a Washington Post report about a lawsuit filed against Zillow, “Roughly one quarter of the time, the value estimate is off by 10 percent or more of the selling price, and wrong by 20 percent or more 10 percent of the time. The 5 percent median error rate may sound modest, but when computed against median sales prices, the errors can translate into tens of thousands of dollars — hundreds of thousands in high-cost areas.”
Which one is your list price?
Aha! Another good question. Your list price will be determined after a comparative market analysis, which will take into account all the particulars of your home, comparable properties in your area and local market conditions. We want to get close to market value — asking for what’s fair without overpricing. But the final list price will also take into account how much you need to get out of the sale and how fast you need to sell.
To talk more about how much your home is worth and how we can maximize the market to your advantage, call me at (540) 353-0123 or email me at firstname.lastname@example.org. Be sure to like my Facebook page.