The term “market value” is important to both homebuyers and sellers. Arriving at a home’s market value means taking stock of several components. Whether you want to buy, sell, refinance, or secure a home equity loan, you’ll need to know what market value means.

What Comprises Market Value?

Let’s begin by looking at the finite, measurable metrics that go into figuring out a home’s market value.

• Square footage The size of the home is one of the easiest ways to figure the ballpark market value. The more livable space in a home, the higher it’s value. Small, compact homes will have less value.
• Bedrooms and bathrooms The more beds and baths, the higher the home’s market value will probably be.
• Lot size Most people don’t want to be right on top of their neighbors. A vast, roomy yard is attractive to buyers, which drives the value up.
• Location, location, location! Just like the 90s show said, the ZIP code matters. The section of town the home is located is a huge factor in its market value. Homes in sought-after areas — like downtown — may be double the market value of less-desirable sections of town.

What Else Helps Determine Market Value?

Other ways to determine the market value of a home include the following:

• Online tools Several websites generate a home’s market value by computing the public records information into a calculation.
• Appraisals Ordering a professional appraisal is one of the best ways to arrive at an accurate assessment of the market value of a home. The appraiser will inspect the home and use many pieces of data to pinpoint its market value.
• Neighborhood home sale prices Comparing the prices that nearby homes have sold for can give you a good idea of a home’s value.

What If It’s a Seller’s Market? Or a Buyer’s Market?

The law of supply and demand is in full effect when calculating market value. If it’s a buyer’s market, there are lots of homes on the market, driving the price lower. A strong seller’s market with few available properties for sale may drive the price much higher.

What’s the Difference Between Assessed Value and Market Value?

The assessed value and market value are not the same, and it’s important to remember that. The assessed value is the value that determines the amount the homeowner pays in property taxes. Market value is the amount a buyer would pay for the home. The assessed value will typically be lower than the market value.

Understanding how a home is valued and the components that go into it is important for buyers and sellers alike. It helps with budgeting, pricing, and avoiding overpaying for a property.

Are you looking for a home? Get in touch with MIG and let one of their experienced loan officers help with your next Tennessee mortgage.