Selling you home can feel like an overwhelming task that comes with a lot of steps. From putting your home on the market to open houses and showings, and after all this hard work, you worry you won’t get a fair price for your home.
If you want to get a fair price for your home, your best option is to figure out the fair market value of your home. There is much more to this value than whether there is a demand for your home or not.
There are many ways to think about value when it comes to your home. Of course, how much you paid for it, but that’s only the first part and is not all that accurate. The value of your home can go up or down during the period you own your home. In addition, it’s possible you paid more than a fair price when you purchased.
Market value can help you put a value on your home. The market value is what the home would sell for if you put it on the market right now.
This is a great starting point to help you determine your fair market value. It’s still not the best way, but it is a great place to begin. If the market has a shortage of homes available, then your estimated price will be high. Of course, just the opposite, if there are an ample number of homes on the market, your price goes down.
The time of year you decide to put your home on the market for sale can change your market value as well. So, in the end, maybe this is not a great way to determine how to get a fair price for your home.
Fair Market Value: What is It?
Although fair market value is similar to market value, it differs in that the fair market value is based on the price both buyers and sellers are considering pricing in a fair and rational manner.
If a seller is straightforward and not overpricing their home, they will find themselves receiving a fair market value sale in the end. If a buyer is not trying to swing a deal, cut corners or save extra money, then they will offer to pay fair market value.
When a lender is going to refinance a home, or an insurance company is trying to determine a settlement payout, they use the fair market value to determine factors that go into their final decision. In addition, courts can use fair market value when transferring an estate to an heir.
Fair Market Value Does Matter
The fair market value of a home is the best, true value of that home. Fair market value can help you determine if you are under water with the lender (you owe more than what your property is worth). Local counties use fair market values to determine the assessed value in which property taxes are calculated.
Fair market value is also used by the IRS to ensure homeowners do not sell for exceptionally low sale prices to avoid tax implications. Just as in the case of a business, you cannot sell to your friend or family member for a $1 so you avoid any capital gains.
If you have been renting the home out and you plan to sell, you want to be sure to get a fair price for your rental property. So, it is vital to know your fair market value.
In the case of a deceased family member in which you have inherited a home, the court uses fair market value to determine how much an heir should pay for the home if they so choose to purchase. This valuation of fair market value is useful when the heirs decide to sell the property they have inherited as well.
Real estate can be hard to put a value on because it is an asset that is not easily converted to cash. But, if you determine the fair market value of your home, you will know where you stand when you are ready to put the home on the market for sale.
How to Determine Fair Market Value
Unfortunately, there is no definitive formula to calculate fair market value. There are online tools, however, they can be off by huge margins that can be harmful to you in the end.
The great news is that there are professionals that can look at your home who know how to determine fair market value for you.
A licensed appraiser, for example, is a great way to obtain an accurate fair market value for your home. Professional appraisers take quite a few factors into consideration to come up with a fair market value for your home.
Here are some factors appraisers will take a look at:
- Size of your home.
- Curb Appeal and the Architecture Style
- External Factors (Noise in the area, for example)
- Value of Similar Homes in Your Neighborhood (Particularly ones that have sold recently)
An appraiser is paid outright, they are not on commission, therefore, you know they are not biased. A licensed appraiser is specifically trained to come up with a value for your home.
How Does Fair Market Value Affect Me?
Fair market value helps you get what you deserve when you sell your home or an inherited home.
If you have inherited a home, more than likely, you would have no idea what the property is worth. In many cases, the home was occupied for a long time by the deceased relative.
In addition, you are unsure about how well the relative cared for the home. This can really hinder determining a fair market value for the home and what you should put it on the market for.
If you determine the fair market value, you will have a strong starting point that will be recognized by the courts and banks, which is very helpful in the case of an inherited home.
When you have been renting a home out for quite some time, selling it may be on your list of things to do. However, before you decide to sell, you want to be sure you get a fair price for it.
If you have taken great care for your rental, you deserve a fair price. As mentioned previously, a licensed appraiser can help you by taking into consideration the condition of the rental and how well you have taken care of the property. This will help reassure potential buyers.
Since you have had this rental for a number of years, the sales price should take into consideration of changes to the value over time, as well as changes or developments within the neighborhood.
You may find out that the value of your rental is more than you though it would be.
Fair Cash Offer for Your Home
Selling your home, especially one that you have recently inherited or have been renting out can feel like a really long process and include too many steps.
The good news is there are professionals who will buy your property for a fair cash offer and they can do so quickly. We pride ourselves on working with homeowners directly to quickly get to the closing table in a professional manner from beginning to end. Contact us today to find out what your home is worth and explore your options to sell your home quickly for cash in Massachusetts.