How To Calculate The Market Value Of Residential Properties

You need to determine the market value of the property or its fair market price if want to buy or sell a property. Estimating the market value of a property is not only an important step in buying or selling a property, but it is also crucial when requesting for a tax deductions. And the primary method used by appraisers to determine the market value of a residential property is generally through sales comparison approach.

Market value is the value placed on a property for assessment purposes which is based on the current market value. It is the price at which a given property or product is transacted between a willing, unhurried buyer and a seller who know all the pertinent facts about the property. Moreover, it is the likely price a property should command in a competitive and open market.

Real estate agents consider several factors that may affect the property’s market value namely the external and internal characteristics, supply and demand, and location before they conduct CMA or Comparative market analysis to determine the market value of a home.

The external characteristics is all about the home’s curb appeal, lot size, home condition, architectural style, sidewalk, water or sewage systems, and so on. The internal characteristics, on the other other hand is about the construction quality, size and number of rooms, energy efficiency, and so on for the internal features.

Supply and demand talks about how quickly the homes in an area sell and the number of homes for sale versus the number of buyers. On the other hand, location is about the appeal or the popularity of the area for a particular school, neighborhood, etc.

These factors is important in determining the market value of properties and plays an significant role in setting business budgets, managing taxes, as well as in making successful real estate deals.

It is difficult to find an exact comparable sale so adjustments are made for differences between the property being valued and the comparable properties that have sold. Thus, recent sales of at least three properties in a similar neighborhood are examined. These homes should have comparable building style, size and construction, lot sizes, square footage, home style, age, and location.

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