Understanding the market value of your home is important if you are thinking of selling it. It also becomes a relevant number if you are buying a new home.
Not everyone understands what market value is and what it is not. For example, it is not the same as the appraised value.
Below, we cover what you need to know about calculating the market value of a home.
The basics of market value
The market value of a home is often referred to as fair market value. When buying or selling, market value will determine the price of a home.
There is no standard formula for determining fair market value. Instead, you need to factor in comps and real estate appraisals as part of the calculation. You may be able to get a very rough estimate by comparing the square footage to comparable properties in the same area.
A professional appraiser can also help you understand the value of a home, at least in terms of an estimate. Yet fair market value is ultimately what a buyer would be willing to pay.
Market value is an expectation of what a property would sell for during the time period you are calculating the value. If you were to sell your home today, the price you think you can get is market value. Maybe you could also look at how a bank would value your home if you needed to refinance immediately or get a home equity loan.