If you are contemplating selling your home, the first question that inevitably arises is, “What is the value of my house?” Often, countless homeowners turn to popular platforms like Zillow or Redfin for an estimated market value. While these online algorithms provide a starting point, I always highly advise reaching out to a seasoned real estate professional for a more precise evaluation. However, today I am going to share with you my best kept secrets and insights on how I determine fair market value for a seller thinking about listing their home.

To understand how I determine an accurate home evaluation range, note that I follow the data research approach used by appraisers to establish fair market value. If we take a look at a pool of buyers, according to the National Association of Realtors in 2022, 78% of homebuyers relied on financing to purchase a home. When a buyer seeks financing, the lender usually requires an appraisal to ensure the loan aligns with the home’s actual market value. This safeguards both the lender’s and the buyer’s interests while preventing rapid market inflation.

The lender arranges the appraisal through an impartial third party. No involved party in the real estate transaction can request a specific appraiser. An appraiser is randomly assigned and has no stake in the transaction, ensuring fairness for all parties involved. Knowing that a majority of buyers require financing, my goal is to confidently assign a value to your property that can be supported by data when presented to an appraiser. This will minimize risks of any appraisal issues during the transaction process. My goal is to avoid any complications and ensure that your home appraises successfully.

So, what’s the process for appraisers to determine the fair market value of a home? Appraisers follow a systematic approach that involves conducting a detailed property inspection, analyzing comparable sales, and considering additional approaches like the cost and income approach, when relevant. In my research, I specifically focus on studying past comparable sales and utilizing their criteria as a guiding factor in my analysis.

When searching for comparables, I focus on 4 essential guidelines that appraisers follow:

■ First, I look for comparable property. For instance, if I’m evaluating a residential, two-story, 4-bedroom, 2.5-bathroom home, I aim to identify other homes that closely mirror these specifications. I deliberately exclude condos, manufactured homes, and townhomes from my search to ensure comparability remains consistent.

■ To start my search, I begin looking for comparable property within a quarter-mile radius of the subject property. Typically, appraisers only require three comparable homes to support fair market value, but I strive to gather as many as possible to strengthen my findings. If the search within a ¼ mile doesn’t procure enough comparable homes, I gradually expand the search in quarter-mile increments, with the goal of staying within a few miles if possible.

■ Appraisers primarily rely on sold properties as they provide the most definitive and objective data to support fair market value. However, considering that real estate is living and breathing, I also take into consideration active and pending properties to gather real-time insights into current market conditions.

■ Finally, appraisers typically only consider comparable properties that have sold within the past 180 days. However, during periods of market fluctuations, I may narrow this timeframe to 30-60 days in my own search to ensure a more accurate data set of sold homes.

By following these guidelines, I am always able to gather the most accurate and up-to-date housing data for my clients. With this information in hand, I create specialized reports that not only help me decipher the details but also empower my clients to understand the market better. I only review these reports with my clients in the comfort of their own home after I conduct a thorough walkthrough to assess the property’s condition. It’s during this process that I can truly fine-tune my pricing recommendations based on a comprehensive understanding.

It is also pretty common for homeowners to keep tabs on their home’s value by using platforms such as Zillow or Redfin. Knowing this, I tend to gather my client’s perspective on home value as well. This information can be an essential factor when considering the best pricing strategy. By incorporating their insights, my goal is to foster a collaborative and informed approach as we delve into the pricing discussion.

Learning to price a home accurately takes practice and a thorough understanding of the market. Hopefully these insights will help as you consider the value of your home as you contemplate taking on the journey of selling OR having fun tracking your equity. If you reach out to your real estate broker requesting a comprehensive market analysis, ask them how they gathered their data and what search criteria they used during their presentation if they have not already reviewed it with you.

Follow these principles and you may impress your agent with your newfound knowledge, understanding market value and how to price a home!