Pricing Your Home

  

If you're thinking of selling your home, you may be fantasizing about the profit you'll reap from the sale or calculating exactly how much you'll need to pay off your current mortgage and have enough left over for a down payment on the next home.

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Before your fantasies run amok, you need to realize that, while you can estimate the value of your home in a variety of ways, the true value is only what a buyer will pay for it. That said, there are several ways to get a strong idea of how much a buyer will pay for the property in current market conditions.

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What Your Home Isn't Worth

Many homeowners find it confusing that there are various numbers floating around that indicate their home value. Here are a few:

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Property tax assessment. Each jurisdiction uses a formula to establish home values for a tax assessment, but this price rarely correlates with the market value of your home. Your tax assessment can be higher or lower than the current market value.

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Homeowners insurance value. Insurance estimates are based on the cost of replacing your home without the land, so this value is skewed compared to market value.

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Neighbor's home value. Even if your neighbor's home is similar to yours, it's not likely to be identical. A REALTOR® can help you evaluate your home's worth in the context of other nearby properties.

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Cost when you purchased the home. Regardless of how long ago you purchased your property, the value can have gone up or down.

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Mortgage balance. Your mortgage balance simply reflects your home loan. The difference between your loan payoff and the market value of your home is your equity.