Hey guys! Welcome back to the blog! Today I’m sharing one of my most asked questions from homeowners! Whether you’re thinking of selling or not, I think you’ll want to know too! I often hear homeowners say “Well my house is assessed at $X so I could probably list it right around there.”
And then comes the question: “So what is the difference between the assessed value and the market value anyways?” Let me explain! Then I’ll share how to figure out which price you should use to set the list price of your house.
LET’S START WITH THE ASSESSED VALUE:
- The assessed value of your home is used to calculate your property taxes. This value is determined by an assessor assigned by your municipality. The assessor comes up with your home value based on recently sold properties nearby, the size and location of your home.
- The assessed value of your home is public knowledge contained in property records.
- It’s actually common for the assessed value to be lower than the market value so it’s important to always consult with a professional before listing your home for sale to help you determine what price would be appropriate. You want to make sure you’re not underpricing your home because you’re only taking the assessed value into consideration.
Now for the Market Value
- The market value of a home is determined by a variety of characteristics. These include the location, the square footage, lot size, number of bedrooms and bathrooms, the condition and quality, as well as the finishes such as appliances, flooring, kitchen and bath updates and any other specific home features.
- The market value also takes comparable homes into consideration by looking at what is currently for sale and what has recently sold in the neighborhood. Supply and demand determine whether or not it is a buyer or seller’s market. This means how many homes are for sale vs how many buyers are buying them.
- After compiling all of that data, you can come up with an accurate list price for your home. The actual market value will be decided based on what a buyer is willing to pay for the home and what the seller agrees to sell for.
ONE THING TO KEEP IN MIND
- If you’re looking to sites like Zillow to figure out what your “market value” is, you NEED to get a second opinion. Many times the Zillow value is unrealistic and either much higher than what your house could reasonably sell for or much lower.
- I recently worked with a seller who thought his home was valued about $45,000 lower than what we determined to be the market value. He was basing his value solely on his assessed value and what Zillow had listed.
- Since Zillow has never been inside your home, they are generating your value based on neighboring homes that have sold recently and the rest is just data gathered by a computer and ultimately spitting out an average price.
HOW SHOULD I FIGURE OUT WHAT PRICE TO LIST MY HOME AT THEN?
- You’ll want to have a professional tour the home, learn about any updates you’ve done and anything else that could increase or decrease the market value of your home before coming up with an accurate list price.
- You wouldn’t want to make the mistake of pricing it way below market value and leaving $45,000 on the table like the seller I mentioned almost did.
- A house in poor condition would most likely sell under average but if your house has updates and is in great condition, it could sell even above average homes in the neighborhood.
Things to Remember:
• Always meet with a professional before putting your house on the market. Your home is likely your biggest investment and can continue to be used as an investment as you buy the next home and continue to build equity. You want to make sure you’re making smart real estate decisions and not leaving money on the table that shouldn’t be left.
Thank you for joining me and if you want to chat some more about the differences and maybe even throw in what the APPRAISED VALUE of your home means, you can always email me or send me a DM on Instagram! I always look forward to interacting with you.
Until Next Time!