Sell My Home - What Is My Fair Market Value?

Once I make a good purchase on a home, invest a little money making repairs and improvements and finally get ready to sell my home, I take a deep breath and remember that my buyer will more than likely need to get a mortgage loan. Having obtained many mortgage loans myself over the years I am very familiar with filling out an application to borrow mortgage money.

Not only do will my buyers have to qualify in the process of obtaining their mortgage, but so does the home itself. Before making a mortgage loan all lenders have formulas to determine the fair market value of a home, a value used to establish the proper loan amount and avoid taking too much risk. In the present marketplace most lenders are very cautious to qualify borrowers carefully. Let's talk about the definition of "fair market value" and how it is determined. Each time I buy a home to re-sell, I remind myself how important it is to know the fair market value whenever I get ready to sell my home.

The sales price I choose is not as important as the fair market value selected by a lender. I'm like everybody else, really, meaning I'm inclined to pick a sales price based on what I paid for my home and how much I spent on improvements. But that formula may be completely off when it comes to a true fair market value. It may be too high or too low, depending on the specific criteria of each lender. Lenders have one habit in common, however, which is determining the fair market value of a home by researching market data from the same local area where the house is located.

Banks and mortgage companies contact real estate professionals or go directly to the county to accumulate sales prices of similar properties sold recently in the same area. Averaging this data provides a dollar amount which represents the fair market value for loan purposes. You've probably heard people taking about comparables or "comps", the term used to describe similar sold homes selected in the data collection process. I have bought a lot of homes over the years, so whenever I get ready to sell my home, the one I've been working on for awhile and have grown familiar with, I always get current market information to stay competitive in my sales price.

I have found that comps are available online, so it's easy to find them and to set the price of my home, which I always do before placing an ad or talking to any prospective buyers. I always know in advance the same, current comps that mortgage lenders will be using to calculate the fair market value of my home. You need to know that information, too, because it will help insure that you price your home to sell and close quickly.

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