Preparing to sell your home necessitates the determination of a selling price that is sensitive to competition but accounts for unique characteristics of your property. With home values constantly changing, figuring out the current value of your home is crucial. As a seller, you want to set an asking price that not only attracts buyers but also ensures that you will not under-price your home. Many variables can affect your house value, but lets look at the methods appraisers use to determine the value of a home.

The Cost Approach
The cost approach is a method whereby an appraiser looks at the current cost of constructing a home similar to the one in question. They come up with an average cost for a home in a similar neighborhood, with similar quality of construction. They base their home value estimate on the current cost of construction materials, labor and builder profit. Typically, this approach is more valid in relation to new construction.

The Income Approach
The income approach is a completely different way of looking at house value. In this approach an appraiser would determine the current market rental for homes such as yours, then using a reasonable return on investment, calculate the homes estimated value. Obviously, this approach is of more value in an investment and rental scenario.

The Market Approach
The market approach is perhaps the most used and most realistic approach to determining a home’s value. The market approach presumes that what similar houses have actually sold for is what your home is worth. Using recent comparable home sales is a prerequisite to establishing a good value, since prices can change fairly rapidly in some markets.
In the market approach, an appraiser will typically find 3 recent home sales. They will start by finding comparable homes in the same neighborhood sold within the past six months. Next, they’ll calculate a price per square foot for each home, and adjust that number up or down based upon special features such as an in-ground pool, extra bathroom or large lot. Using the final price per square foot, they will calculate a home value for the subject property. Appraisers have the knowledge and experience to reconcile all these approaches, take into account the current market conditions and come up with a price. Getting an appraisal can cost a few hundred dollars, but provide you with a more accurate house value, saving you or your prospects from guessing as to your home’s worth. Consulting with Realtors
Realtors and real estate agents often use a Competitive Market Analysis (CMA) to establish an asking price for your home. Though not an accurate appraisal, a CMA uses methods similar to the Market Approach by looking at recent home sales to come up with an asking price. Real estate agents very familiar with an area can often determine a good, reasonable asking price. An asking price is not necessarily the actual house value, but is often very close.
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Often , the market decides home values and your asking price will only determine how long your home remains available for sale.

Don't Let an Agent "Buy Your Listing"

If one agent says he or she can sell your house for substantially more money than the other agents quoted you, they're probably telling you what they think you want to hear in order to get your listing. Or, they may not be familiar with the market in your town or neighborhood. "Statistics show that properties which are over-priced when they are listed stay on the market longer and sell for less than if they had been properly priced from the start.”. Far too often we have seen property owners engage Realtors who have told Seller’s what they wanted to hear, and upon expiration of that Agreement associate themselves with professional Agents who sell their properties for the price that was originally discussed. Unfortunately, the costs associated with owning the property during the period the first Agent had the Listing are wasted.