How to Determine Fair Market Value
If you own a home, you know that it's important to protect that investment. One of the ways to do this is to secure a great mortgage with a low rate and payment that matches your long-term goals. Another important consideration is to consistently be aware of the Fair Market Value of the house that shows how much equity you're gaining and how well your investment is growing.
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Instructions
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Ask around the neighborhood to begin to get an idea of the Fair Market Value (FMV) of your home. A good way to do this is to find neighbors that both live on your street and that have houses that are comparable in size, structure and style. Asking a neighbor with a much larger house or much smaller house will mislead you. Also, if you've had any neighbors refinance recently that you are aware of, they will be a good resource.
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Get a preliminary reading by researching online. Check out zillow.com, which offers up-to-date readings of most neighborhoods, taking into account the state of the economy, housing market, your town and school district, and population surges or declines, as well as recent sales, foreclosures and purchases in the area (see Resources below). While online research can give you a good gauge of how your neighborhood is performing, it shouldn't be the be all and end all.
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Determine what kind of improvements you've made to your property. Perhaps you've put an addition on, remodeled your kitchen or finished your basement. All improvements will add value to the FMV. Consider how much you paid for the home originally, how many years have elapsed since you purchased the home, and your improvements.
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Hire a reputable appraiser to appraise the property. Be prepared with all the information you've gleaned so far. Appraisers usually will come up with a number on their own, but they will certainly listen to all the information you've provided, and you may give them inside information that they perhaps would not have considered. At the end of the day, a professional appraiser should be able to give you a good Fair Market Value.
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