Many people understand that the value of their home is primarily tied to the house’s location and size. But in determining the market value there are nuances and details that need to be considered. Market value, whether suggested by a realtor, appraiser or an investor attempting to buy your home, should primarily be determined through the identification of recent closed sales of properties similar to yours. These are called “comps”, short for comparable properties to yours.
Reliable comps should come from sales as close to your home as possible, usually within 1/4 – 1/3 miles in urban areas and within 1/2 – 3/4 mile in suburban areas. The presence of major roads or freeways should be considered if a comp is within that radius but on the opposite side of such a dividing line. Unless you have an architecturally unique house, reliable comps should be of the same construction style, in other words ramblers compared to other ramblers, 2-story houses compared to other 2-story houses, etc.
Even further drilling down to an accurate market value analysis based on comps will be adjustments based on square footage, bed and bath count and features. For example, finished square footage above ground may be worth $30/square foot, a bathroom $8,000, a recently remodeled kitchen $10,000 or more.
Keep all these items in mind when starting to figure out the market value for your home. What your hear from neighbors and friends about what houses “go for” in your neighborhood may be a rough ballpark but will need to be considered carefully against an accurate set of comps for properties that are truly similar to yours.