You can determine what your home is worth by formulating a CMA or Comparative Market Analysis using several determining factors to determine value.
You can determine what your home is worth by formulating a CMA or Comparative Market Analysis like the real estate agents do. A CMA is not an appraisal but is "The Highest price in terms of money in which a property will bring in a competitive and open market under all conditions requisite to a fair sale".
To be "requisite to a fair sale" the buyer and seller are typically motivated and are both well informed or advised. The home would also need to sell at this price in a reasonable amount of time. Which means you will need to take into consideration your markets competition.
The market data or comparison approach to estimating a homes value is the most relevant method for estimating the value of single family homes. The price determined should represent a cash price for the home, not where the price found is affected by special financing or conditions that count as credits in the sale.
Often home owners feel that there home is worth more than the market value because they have memories or pride of ownership where their home has subjective value to the owner.
Value, price and cost are not the same. You will need to determine value based on several principles. Is the highest and best use for the property being utilized? Is the price determined for the home in accordance with supply and demand? Is the home conforming to restrictive covenants and zoning laws? Is the price based on anticipation of the future benefits of ownership or present value? Past value is not important in estimating current or future value.
To come upon a true market value an owner needs to determine value based on 1) Utility 2) Scarcity 3) transferability and 4) effective demand.
Depreciation or a loss in the value of your home should also be considered when determining the market value. Depreciation can be from physical deterioration, functional obsolescence or economic obsolescence and all can have an adverse affect on the properties value.
COMPARISON APPROACH
You will need to do your homework and find at least three comparable prosperities to yours to come up with an accurate CMA. Comparables need to be have been sold recently in your area. You will need to obtain the date the comparable home sold, verified sales price, length of time on the market, method of financing used. You will also need to have a list of the normal physical characteristics each comparable sale has like square footage, number of bedrooms, baths, garage, age of home, location etc.
Of course very few homes will be an exact comparable and you will need to make price allowances for the difference. Plus and minus adjustments are made to reconcile the differences and arrive at a value estimate for your property based on basis of the price for which each comparable property is sold. You would add a plus adjustment to comparable when the comparable is deficient in a area that our home already has. For example, If you have a large lot but the comparable home has a smaller lot, you would credit the other home $1,000 or more based on the value of larger lots in your area.
