Property values, depending on the economy and other factors, may be a moving target. In a healthy market when supply and demand are balanced, it is not difficult to determine a home’s value. When something is out of alignment, like we are witnessing now, with such low inventory and high buyer interest, values can be more of a challenge to determine.

Put simply, the market value of a property is the amount of money a buyer will pay for it. This is the evaluation method we use when determining a list price for a home. The assessed value (which is what is used for your property taxes) of a home is rarely the same as the market value and involves the use of a complex set of calculations to determine property taxes. The appraised value of a home is determined by a professional appraiser, typically hired by a lender, to ensure that the home is selling at or above market value before lending on it.

Since market value is revealed by past transactions, we use the sales prices of homes that sold over the past six months as a guideline. They narrow the field to include only those homes within a certain radius — typically half to one mile — of the subject home. Then compare the homes to one another, adding and deducting value according to the age of the home, size, location and amenities. Some homes are more of a challenge to compare, such as custom homes, homes with a lot of acreage, or homes in rural areas.

Once we have performed the valuation research and determined a value, we may ask the homeowner for any information you may have about the comparable homes used. While the Multiple Listing Service (MLS) database is full of valuable real estate information, it can’t tell the agent the reason the homeowner decided to sell, for instance. Perhaps the neighbors were going through a divorce and needed to sell quickly, so they accepted a low price for the home. Maybe another neighbor included all of the furniture in the sale, thus inflating the price. Or maybe the home sold to a friend so the home didn’t have the opportunity to go on the active market where a Buyers would determine the actual value. This type of information helps further tweak the home’s value.