You can use comparable sales data to estimate a home's value.
Local real estate market activity is a major determining factor of home values. You can estimate a home's value based on prices of similar, recently sold homes called comparable properties. Using comparable properties that are the most similar to the subject property will provide the best estimate of value. A comparable property must have been built around the same time as the subject property, be similar in size and have very similar characteristics to the subject property. A comparable property's sales transaction must have occurred between a willing seller and a willing buyer who are unrelated to each other.
Instructions
1. Contact your municipality's property assessor's office, local real estate agent or title company to obtain information about five houses that have sold within the last six months that are comparable to the subject property you want to value. Obtain the sales price, size in square feet, lot size and other characteristics, such as number of bedrooms and bathrooms, of each property.
2. Divide each home's sales price by its size in square feet to determine each home's sales price per square foot. For example, if the first house sold for $300,000 and is 2,000 square feet, divide $300,000 by 2,000 to get $150 per square foot. Assume the other four houses sold for $155, $170, $135 and $140 per square foot.
3. Eliminate the highest and lowest prices per square foot. In the example, eliminate the lowest price per square foot of $135 and the highest of $170.
4. Calculate the sum of the remaining three prices per square foot. Divide your result by 3 to calculate an average sales price per square foot. In the example, calculate the sum of $150, $155 and $140 to get $445. Divide this by 3 to get an average sales price per square foot of $148.33.
5. Multiply the average sales price per square foot by the number of square feet of the subject property to estimate the subject property's value. In the example, if the subject property is 1,900 square feet, multiply $148.33 by 1,900 to get a $281,827 estimate of the subject home's value.
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