Determining the market value of your home is based on a very simple formula, and is a service that real estate agents provide for free.
Unlike market value, the dollar value that's placed on your home for tax assessment or home insurance purposes is based on the actual replacement cost of the materials that go into buying an undeveloped lot and building a house on it. What does it cost in today's dollars for 2x4s and bags of cement? In most cases (and ideally) the assessed value of a home will be lower than its market value.
Once you've developed that lot and built a home on it however, its intrinsic value will rise due to many other factors that are harder to quantify than the value of board timber. In finding market value, you're trying to determine how much your home would be worth to someone who would be measuring its value against factors that aren't important to your local lumber store in setting a price on materials, and factors that perhaps aren't even important to you. What is the total square footage of your home, how many bedrooms does it have? Does it have one story, or two? What kind of siding does it have, a high-maintenance but aesthetically pleasing cedar siding, or a more practical low-maintenance vinyl siding? What schools are in the area, how close is it to shopping areas? Is it in a high-traffic area with a low commute time for one potential buyer, or in a quiet suburb that would mean a long commute for another? Finding the right market value of your home isn't entirely unlike trying to set the right price on an antique collectible. It may be worth a lot, but only to the right buyer at the right time.
There are several reasons why you might need to know the market value of your home, and to a certain extent your reason will determine how you go about getting the information. Whatever your reason, the underlying process is still the same: you're comparing your home's features to similar homes in the area that have sold in the recent past. In a way, you're taking a snapshot of what your home is likely to be worth to a potential buyer if you were to put a For Sale sign in your yard today.
The homes that are chosen to measure your house against are referred to as comparables, or comps, by mortgage lenders and real estate agents. Finding those homes, and the price they were sold for, can be difficult without enlisting the help of a local real estate agent. An agent has access to your state's Multiple Listing Service, which is a large database of all homes that have been listed for sale in the state you live in, and includes information on those home's features and final sale price. If the reason you need your home's market value is because you're thinking of selling it in the near future, ask a real estate agent to come to your home to give you a market value assessment. In fact, ask two or three agents from different real estate companies to do the same thing. It's a service they provide for free in hopes that you'll choose them when you're ready to list your home for sale. You'll learn a lot about the real estate market in your area, which will come in handy when you put your home on the market, and it's also an opportunity for you to begin interviewing real estate agents.
Availability of comparables and the volatility of the market will determine how large the area is that an agent will look in, how closely they need to match feature-to-feature, and how far back in time they look at home sales. Unless you live in a one of a kind custom-built home, if you live in a densely populated urban area there will have been many homes sold within the past three to six months that are in your same neighborhood or zip code area that have features similar to your home, such as square footage, number of bedrooms, age of construction and general condition. If you live in a rural area where there aren't many homes sold each month, an agent will look at the homes sold in a much larger area, going back as far as a year, and that aren't quite as similar to the home you own.
A good, experienced agent will have sold enough homes that they develop a kind of sixth sense about market values and can help you make the final decision on the sale price you want to set for your home. This is where it can be helpful to talk to several agents. Their estimates may vary widely, in which case somewhere in the middle is probably the right market price for your home.
