Knowing the real value of your home can be difficult especially when there are so many foreclosures and short sales in the real estate market today. However, determining its fair market price is a fundamental step before selling or buying homes for sale, and even in requesting tax deductions. Comparable sales method is the most common method and the most accurate one used in the market. How the fair market value was calculated determines a fair price. Fair market value means the maximum and minimum price that an individual or business is willing to pay for an item or service. This is the critical step that will help you calculate the fair market value which is essential in setting business budgets, managing taxes and making successful real estate deals.
Furthermore, having a fair estimate of your home market value is a good way to determine a reasonable asking price for the home. Fair market values are not elated to the price paid for the home but on the price of recent sales of similar homes in your area. In short, it is based on a normal market condition where neither the seller nor the buyer is in a hurry to buy or sell the property. Here are the steps you have to do in order to determine your home market value:
1. Survey the price of recent homes for sale in your area. Look into real estate websites to find the actual price of homes on the market listed over the past six months in the same neighborhood in your area. Try also looking for sold properties in your neighborhood on your local government web sites. These online databases and real estate web sites will give you detailed information on homes for sale within a specific area. Take note of the seller’s name. It could be a bank as in the case of a foreclosure sale, for example.
2. Contact your real estate agent to prepare a CMA report. A CMA report or Comparative Market Analysis contains the following:
a. Active listings of homes for sale in your area which can help you determine the extent of competition for buyers. For the properties listed here, they do not nactually show the actual market value of the home until they sell. Most home sellers, but not all, offer home sale prices that are really expensive, but actually sell for less if sold.
b. Pending listings of homes were formerly in the active listings. These pending homes for sale are not yet closed for transaction. Buyers won’t have access on their actual sold price because they are actually under contract.
c. Homes that have been closed within the past six months and will be used for comparable sales are called Sold Listings. This listing will be used by your agent in appraising your home for a buyer together with the pending sales. Therefore, the comparable sales will determine your home market value.
Well, there are basically more things included in the CMA report like the Off-Market- Withdrawn-Canceled properties and Expired Listings. These five listings will guide you in assessing the actual market value of your property.
3. Choose three to five recently sold homes that are most similar to your home, from your CMA report. Then, get the average square footage and the average sold price. Add the total square footage of the selected homes and divide by the number of homes, to get the average square footage. add the sold price amounts together and divide by the number of home to get the average sold price. To get the average price per square foot, take the average price and divide it by the average square footage. To get the fair market value of your Virginia home based on recent home sales, take the square footage of your home and multiply it by the average price per square foot of the recently sold homes.
Interested in buying or selling a real property? Contact your real estate agent to guide you in determining the fair market value of your home. Get more information at Virginia Homes .
