How Much Is That Home Worth? What To Know About Home Values

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If you're interested in putting your house up for sale, you first need to decide if you're going to sell the house on your own or if you want the help of a real estate agent. Some people do sell their homes without any assistance, but working with an agent simplifies the entire process for the seller. In this blog, you'll learn why it's a good choice to speak with an agent to list your house. We aren't connected to the real estate industry, but we have learned the importance of having an agent by our side. The articles you'll read on this site will explain the duties of an agent, such as advertising the property, filing the paperwork and staging the home. The expertise of a real estate agent can make this process more profitable and less stressful for sellers.


How Much Is That Home Worth? What To Know About Home Values

13 October 2020
 Categories: Real Estate, Blog

Buyers looking for their first home might wonder about the difference between the appraised value and market value. Both of these issues are important when it comes to making offers, getting lending approved, and nearly everything else connected to a home purchase. Buying a home is a major event and buyers would do well to understand these two terms before they embark on their home search. Read on and find out what is meant by market and appraised value and how each of them is determined.

Determining Market Value

In most cases, the listing price advertised to buyers is based on the market value of the home. Market values may fluctuate depending on factors like the inventory of available homes, interest rates, and comparisons to other homes. What determines market value is, in large part, due to comparable prices or "comps". Most sellers have their agents help them determine the selling price by performing some research. Comparable prices of other homes must show a close alignment with the following:

  • Location, which might be the town, neighborhood, or even a specific street.
  • Square footage of the home and the lot size or acreage.
  • The number of bedrooms and bathrooms.
  • Special features of the home like a newly remodeled master bath, a swimming pool, or a finished basement.
  • Recent completed sales prices.

Appraised Market Value

This type of valuation is more detailed and focuses on the home itself. Professional appraisers look at some of the same factors as those that determine market value but the number produced by the evaluation can seriously affect your lending. Regardless of what you agreed to pay for the home, your lender will only approve a loan that is in line with an appraisal. You will need to supply the funds to cover any deficits. For example, if your appraisal came in at $500,000 but you offered to pay the buyer $510,000 then you will owe $10,000 in cash to the seller at closing. In hot markets, it's not uncommon to offer more than the appraised value for homes.

While market value may attract a buyer to a home, the appraised value is what secures the home deal. The appraised value is used to determine property taxes, homeowners' insurance premiums and coverage, your down payment, interest rates, and more. To find out more about these two ways of looking at single-family home values, speak to a real estate agent.