Q & A: Appraisals & Market Value

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  1. Can I find out the value of my home through the Internet?
  2. How is a home's value determined?
  3. What is the difference between list price, sale price and appraised value?
  4. What is the difference between market value and appraised value?
  5. What is the return on new versus previously owned homes?
  6. What standards do appraisers use to estimate the value of a home?

Can I find out the value of my home through the Internet?

It is possible to get a rough estimate of your home’s value via the internet. But, if you are looking to obtain the true value of your home, it is best to speak with a local real estate agent who is able to do a CMA (comparative market analysis) on your home. An agent can factor in features and attributes that automated online calculators cannot, and therefore their analysis will be more accurate.

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How is a home's value determined?

A home’s value can be determined using multiple techniques.

- CMA: Prior to listing your home, a real estate agent will perform a Comparative Market Analysis (CMA) which estimates the value of your home based on recent sales of similar homes your area.

- Appraisal: Lenders require that an appraisal be performed prior to closing to ensure the home’s value is not less than the loan amount. Appraisers also base their estimates on prior sales in the area, square footage, location, and home features and upgrades.

- Assessment: Assessments are periodically performed on homes by local governments to evaluate the home’s property taxes. Since property taxes are based on property value, features such as location, size of lot, age of home, and home condition are factored into the assessment.

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What is the difference between list price, sale price and appraised value?

The list price is how much the seller’s asked for when placing the home on the market, the sale price is how much the home actually sold for, and the appraised value is the worth a professional appraiser estimated for the home. Lenders often require an appraisal prior to closing to ensure the home’s value is not less than the loan amount.

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What is the difference between market value and appraised value?

The market value of a home is the estimated price at which the home would currently sell. To obtain the market value of a home, agents will perform a Comparative Market Analysis (CMA) which will estimate the value of the home based on recent sales of similar homes in the area. The appraised value of a home is the worth a professional appraiser estimated for the home. Lenders often require an appraisal prior to closing to ensure the home’s value is not less than the loan amount.

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What is the return on new versus previously owned homes?

There are pros and cons to both new and previously owned homes. New homes tend to be higher in price, and usually require less maintenance. Old homes are often in more desirable, established neighborhoods, but do require more upkeep. When looking to purchase a home, it is often advantageous to compare what type of new home you are able to get in your price range to the older homes within your price range.

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What standards do appraisers use to estimate the value of a home?

Appraisers base their estimates on several factors such as prior sales in the area, square footage, location, home features and upgrades. A copy of a home’s appraisal detailing the standards the appraiser used to reach his or her estimate will be provided to the buyer’s lender after the appraisal has been completed.

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