Who determines what your home is really worth and why that is.
Who sets the value of your home? Many people ask us this question all the time, so today we’re running through how your property’s value is determined.
Put simply, the value of a home is determined when a buyer and a seller come together and agree on a price. Both parties have a number in their head of what they’d like the property to be worth, and it’s up to them to come together and negotiate something they can both agree on.
Sellers want to know, “How much money am I going to make off this sale? How much am I going to profit once I get done paying all these closing costs Realtor fees?” Meanwhile, the buyer is thinking, “What’s my monthly payment going to be when I get into this house?” Buyers’ and sellers’ wants are opposed to each other, but eventually, they have to come together and agree on a number that works for both of them.
“Look at similar home sales in your area to determine what your home might be worth.”
However, once the buyer and seller agree on a price, things aren’t over. You still need to get an appraisal if the buyer has financing. An appraiser’s job is to make sure the bank isn’t lending over what the home is worth, so the bank will only lend up to the appraised value. This means that when financing is involved, the true value of a home is determined by the appraisal.
If you’re selling, the best strategy is to look at similar home sales in your area to determine what your home might be worth. This way you won’t be caught off guard by a low appraisal.
If you have questions about today’s topic or anything else, please call or email us. We are always willing to help!
