And Will I Get Fair Market Value for My Home?
Our clients are understandably concerned whether they will receive what their home is worth when they sell, especially if they’ve been burned by the foreclosure process, if they see that neighborhood property values are dropping for some reason, or if they simply need to sell the house quickly.
Fair Market Value Defined
While the idea of fair market value may seem pretty straightforward at first blush, the concept is actually a bit more complex than you might think, and there are a number of factors to take into account as we work to determine what your house is worth
The IRS defines fair market value as the price your home would fetch if the sale was a so-called ‘arm’s length transaction.’ In this type of purchase the buyer and seller would have no personal relationship, neither party would be coerced to take part, and both parties should have equal access to information about the property.
In relation to the IRS, this partially determines how much you can write off in taxes if you donate the home to charity, what your tax hit will be if you sell the house as an investment, or how much you would receive in an eminent domain case.
This is also important in determining the value of a deceased person’s estate.
How Do I Determine Fair Market Value?
Fair market value is determined by an experienced appraiser who evaluates, among other factors, the size and location of the lot, the size and condition of the house, the quality of the neighborhood, and the value of the property were it to be used for something other than a home.
One of the best ways to get an accurate assessment of the home’s true value is to use comparable sales (AKA ‘comps), whereby the appraiser compares your house to properties similar in quality, condition, and location, and which have sold recently. He or she will adjust the price, accounting for factors which may affect the the value of your home, such as the amount of income it generates if it is a rental or investment property.
If there are few similar properties in the area the appraiser may try to work out how much it would cost to build the house new.
If there are noticeable issues with your house, the appraiser takes these into account, subtracting their potential cost from the value of the home in its ideal condition.
The fair market value of your home is not the same as the assessed value – it may be higher!
Creating the Win-Win Situation
By the time I take these factors into account, I have a very strong idea of how much your home is worth to the market.
My next step is to take a look at your situation. Why do you need to sell? How quickly are you motivated to sell the house? Do you have a hard deadline to vacate?
By combining the appraiser’s evaluation of the property’s condition, your situation, and my 15 years of experience in Denver’s real estate market, I’m confident I’ll be able to come up with an offer that allows all parties to walk away feeling positive about the transaction.
Who is the Denver Homebuyer?
Over the last 14-plus years, I’ve helped more than 200 homeowners in the Denver, Boulder and Castle Rock areas get solid offers on their homes. I specialize in taking challenging situations and transforming them into money in homeowners’ pockets.
Jeff took the worries out of the home buying/selling nightmare by explaining everything up front, and flagging problems ahead of time. His office staff was courteous and prompt as well as helpful.
I was always all smiles after talking to Jeff or his staff because they never left me hanging or feeling I was in over my head. Thank you so much to The Denver Home Buyer!
~Bo, Northglenn, CO