How Real Estate is Appraised and Home Value Determined

It all comes down to one word: comps. Well, okay, maybe two - market comparables. When you call a Realtor to come and tell you what your home is worth, the first thing we do is pull up market comparables.

Market comparables are nothing but homes that are similar to yours, with the same square footage, bedrooms, baths, and so on and have been built close to the time yours has been and - this one is very important - have sold or are active listings in a one mile radius around your property. These houses are the raw data we begin with.

The sold properties usually give us a low to high range within which your property is located. If you have recently remodeled your house with expensive materials (Corian countertops throughout and a granite fireplace for example) we would price the home at the higher end of the market range. If the home has deferred maintenance, it would go on the lower end.

Even more important than the sold comparables however, which were more commonly noticed when the market was going upwards, are the active listings on the market right now. While you might be able to price your property on the high end if you have remodeled, you are limited by your competition which are the active listings.

This balance between actives and solds give us a pretty good idea of what a house will sell for. Of course, no one knows for sure the exact price because the market (read: the buyer) will determine that.

Want to know the value of your property? Drop me an email with the address and I'll be happy to pull up some close comparables!