What is the difference between market value and appraised
value?
The appraised value of a house is a certified appraiser's opinion
of the worth of a home at a given point in time. Lenders require appraisals as
part of the loan application process; fees range from $200 to $300. Market value
is what price the house will bring at a given point in time. A comparative
market analysis is an informal estimate of market value, based on sales of
comparable properties, performed by a real estate agent or broker. Either an
appraisal or a comparative market analysis is the most accurate way to determine
what your home is worth.
What's a house worth?
A home
ultimately is worth what someone will pay for it. Everything else is an estimate
of value. To determine a property's value, most people turn to either an
appraisal or a comparative market analysis. An appraisal is a certified
appraiser's estimate of the value of a home at a given point in time. Appraisers
consider square footage, construction quality, design, floor plan, neighborhood
and availability of transportation, shopping and schools. Appraisers also take
lot size, topography, view and landscaping into account. Most appraisals cost
about $300. A comparative market analysis is a real estate broker's or agent's
informal estimate of a home's market value, based on sales of comparable homes
in a neighborhood. Most agents will give you a comparative market analysis for
free. You can do your own cost comparison by looking up recent sales of
comparable properties in public records. These records are available at local
recorder or assessor offices, through private real estate information companies
or on the Internet.
How is a home's value determined?
You have
several ways to determine the value of a home. An appraisal is a professional
estimate of a property's market value, based on recent sales of comparable
properties, location, square footage and construction quality. This service
varies in cost depending on the price of the home. On average, an appraisal
costs about $300 for a $250,000 house. A comparative market analysis is an
informal estimate of market value performed by a real estate agent based on
similar sales and property attributes. Most agents offer free analyses in the
hopes of winning your business. You also can get a comparable sales report for a
fee from private companies that specialize in real estate data or find
comparable sales information available on various real estate Internet
sites.
What standards do appraisers use to estimate
value?
Appraisers use several factors when estimating a home's
value,
including the home's size and square footage, the condition of the home
and
neighborhood, comparable local sales, any pertinent historical
information,
sales performance and indices that forecast future value. For detailed
information on appraisal standards, contact the Appraisal Institute at
200 W. Madison, Suite 1500, Chicago, IL 60606, 7 a.m. - 5 p.m. CT;
888-7JOINAI (754-4624).
