Market value refers to the price that a seller of real property can expect to receive from a buyer in a fair and open negotiation. Typically, the market value of a home or other real property, such as land, is determined by professional appraisers or real estate agents and is based on a variety of key factors. Especially in tumultuous markets, this price can flucutate dramatically, and while your real estate professional may determine one "market value" for your house, the reality in the end is that the true value is determined by what a buyer is willing to pay for it.
Knowing the market value of your property is important if you are selling your home because it helps determine the asking price. Many sellers who do not understand this concept will price their home too high or too low, both of which could have negative financial results. Similarly, many homeowners fall victim to predatory lending when a lender convinces them to borrow more money than their home is actually worth.
A professional appraiser or real estate agent determines the market value of a home by first comparing other similar properties that have recently sold in your area. This is what real estate professionals refer to as "comparables". They try to locate homes as similar in size and style to your own that have sold in the previous six months to one year. They will also determine the average price per square foot the homes in your area are commanding. While this process alone does not determine the market value of a home, it provides a solid base price for determining a reasonable asking price.
Other factors that will affect market value slightly are improvements to and the condition of the property. Updates to kitchens and baths are the primary improvements to a home that will increase its selling price. Cosmetic updates, such as fresh paint, new carpet, new light fixtures, and window treatments, will definitely help a house show better, but do not improve the overall value. The condition of the property does affect the overall value though. A home with well-maintained or newer mechanical systems, windows, roof, and entry doors will command a higher price than one with outdated mechanics or faulty structures.
If you would like to know the market value of your home, many real estate agents will provide a basic appraisal for free in hopes that you will employ their services when the time comes for you to sell. However, you can also determine a reasonable assessment on your own by gaining access to your county's public real estate tax records. Many counties have online databases for public records that you can search to gather pertinent information to determine a ballpark figure. However, if you are considering selling your home, it is best to get two to three professional opinions on the value of your home before you list it.