How to Figure Comparative Market Value
Comparative market value is an informal way of determining the value of your home. Only a licensed appraiser can determine the true value of your home, but, with a little effort and time, you can come pretty close to determining the market value on your own. Market value is simply what buyers are willing to pay for your home. To find this out, you will need to find out what buyers have been willing to pay for similar homes in your area.
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Instructions
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Search for homes in your area that have sold within the past six months. Try to keep your search area to a one-mile radius. You will need at least three "comps," as they are called in the real estate industry, but five is ideal. You can find this information on real estate websites such as Zillow.com and Trulia.com. Print out the pages so you can make some notes about each comp as you work. The State of New York Office of Real Property's website has an example of how to organize the information.
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Compare the comps to your home in areas such as size, age, condition, location and amenities. Amenities include a gourmet kitchen, extra baths, built-in sound system and upgraded kitchen counters or cabinets. A pool is not considered an amenity.
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Determine a rough estimate of your home's value by comparing it to the comps. Choose a home that you know is worth more than yours as the ceiling price; your home cannot be valued higher than this one. Then, look through your comps to find those that are definitely worth less than yours. For instance, if one home is on, or backs up to, a busy street and yours is on a quiet cul-de-sac, yours is worth more. A substantially smaller home will be valued lower than the larger one. And a home with upgrades or remodeling will be valued slightly higher than one that has not been improved. Soon, you should have a stack of printouts of homes that are worth less than yours and homes that are worth more than yours. The value of your home is between those.
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Check the prices of homes currently on the market in your area, and note the length of time they have been on the market. Homes that languish on the market for a substantial amount of time without a price reduction are generally overpriced. Compare your estimated value to any homes that are similar to yours. If there is a significant difference between the list prices and your valuation, it could be an indication that the market has changed since your comps sold. Generally, you will find that your home's valuation is right in line with those that are currently on the market and priced correctly.
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