So, you’ve decided you want to sell your house. How much is it worth? There are many tools out there to help you figure this out. One of the easiest is Zillow. You just have to type in your address and they will pop back your Zestimate! Realtor.com is also a good resource. More than 900 Multiple Listing Services pour their home listings into this database from across the United States. These are a good place to get started, but you don’t have the final say of what your home is worth.
Take a look at your most recent property tax bill. This will show you the assessed value for your property. Next, find the assessment rate. This will be somewhere between 80 and 90 percent. You can calculate the fair market value from these two numbers. If your property’s tax assessed value is $100,000 and your assessment rate is 90 percent, then your home’s FMV is $111,111. Just take $100,000 divided by 0.9 to get this number.
See what properties have sold in your neighborhood in the past twelve months that are similar to yours. Look at the square footage, the home’s age, the size of the lot, the number of beds and baths and the type of heating and cooling that they have compared to yours. Also, how does the condition of those homes compare to yours? Jot down those addresses and call the recorder’s office. You can ask them how much each of them sold for. You can also look up this information on the recorder’s website. This will help you get in the ballpark of what your property is worth.
Another resource to use is the cost method. This is used to figure out what it would cost to replace your property. You can ask a contractor what he would charge you per square foot to build a home like yours in your area. This will give you a cost of a brand new home. You will then need to deduct an amount for the condition that your home is in compared to a new home. This can be used when comps are hard to find.
You can also look at homes in your area that are for rent and what they rent for. The long-term average housing price/rent ratio is 16. You are valuing your house too high if the housing price/rent ratio is more than 16. If it’s lower, you are valuing your home too low. You can calculate this number by dividing the total yearly rent by the price of the house. If homes in your area rent for $1,500 a month, that equals $18,000 a year. This would mean that the house is worth around $288,000.
A licensed appraiser is the one that has the final word on how much your home is really worth. Appraisers try to be as objective as possible. They start by looking at the prices of nearby, similar homes. They also have to follow a set of rules known as the Home Valuation Code of Conduct. These rules apply to all mortgages that will be owned by Fannie Mae or Freddie Mac. These rules were made to limit the influence of lenders and others on appraisers. Appraisers should also be open to any input that you want to give them about your home or neighborhood that may affect its value.
Do you want to find out how much your Columbia, MO home is worth? Get your own Home Valuation—we are here to help!