How to Estimate Market Value

by Kristie Lorette ; Updated July 27, 2017
Learn how to calculate the estimated market value of a home.

Items you will need

  • Home square footage
  • Recent sales prices for comparable homes in the area

If you’re buying or selling a home, the first thing you’ll want to determine is the estimated market value of the home. While only an appraiser can provide an official market value, it is possible to estimate the market value of a property.

Step 1

Gather data sources. You have three main sources of information you can turn to help you put together the data you’ll need to estimate the market value of a home. You can contact a local real estate agent, check out the real estate section of your local newspaper or pick up a real estate magazine for homes in the area.

Step 2

Find similar homes. Use your data sources to find homes that are similar to the one you’re estimating the value on. Similar homes are also referred to as comparable properties or comps and are the same type of property, have similar square footage, are in the same area and have similar amenities

Step 3

Calculate the square foot price. Pull the sales prices for each of the comparable properties and divide each sales price by the square foot of the property to determine the price per square foot. For example, if the sales price is $200,000 for a 2,000 square feet home, then the square footage price is $100 a square foot.

Step 4

Estimate the market value. Using the price per square foot, multiple this number by the number of square feet in your home to calculate the market value. For example, if your home is 1,900 square feet, then you would multiply $100 by 1,900 square feet to calculate an estimated market value of $190,000.

Tips

  • An official market value of a home or other piece of real estate property can only be determined by a licensed appraiser, so the number you come up with using this calculation is only an estimate.

    The sales and listing prices for real estate properties are mostly determined by the price a buyer is willing to pay in order to buy a property. Even if a seller lists a property at a price they determined from estimating the market value with the above calculation, if a buyer is not willing to pay this price, then it can affect the value of the piece of real estate.

    If there are more buyers in the market than there are homes for sale, this can drive the prices of home up. The prices of homes may drop if there are more homes on the market than there are buyers, so the law of supply and demand also plays a role in market values.

About the Author

Kristie Lorette started writing professionally in 1996. She earned her Bachelor of Science degree in marketing and multinational business from Florida State University and a Master of Business Administration from Nova Southeastern University. Her work has appeared online at Bill Savings, Money Smart Life and Mortgage Loan.

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