What Is Fair Market Value of Home & How to Calculate Sale

When it comes to selling your home, you want to get the best price possible. So an aspect of selling you may read about when researching house sales is fair market value. Exactly how much the fair value of your property is can affect your decision to buy or sell a  property. 

In this blog post, we will be looking at how fair value can affect the buyer and seller, what fair market value is, and how to work out the current market value of home. 

Looking for a quick answer? Check out our quick nav below! 

What does fair market value mean?

Fair Market Value, also referred to as FMV, is the price that a property would sell for on the open market. This price is set under the assumption that both the buyer and the seller have a good knowledge of the property, have their own best interests in mind, are under no outside pressure and are given a reasonable time period to complete the sale. 

If the price is set under these conditions, then the fair market value should give an accurate valuation of the property. 

What does below FMV mean? 

If you sell a property for below its fair market value, then you are selling it for less than its fair market value. This means it is at a discounted price compared to other similar properties in your area. When you sell for fair market price, it is at a price that the buyer and the seller have agreed upon in an open and competitive market. 

What is fair market value used for? 

Fair market value is used for a wide variety of different circumstances, such as for car appraisals, stocks and bonds, tax settings, property, art and for insurance companies. It can also be used in salary negotiations, business sales, and more. 

How to calculate fair market value?

There are essentially 4 main ways that you can determine market value for your property. These are: 

1. Selling price - The most recent price at which a property has been bought or sold is often a good indicator of its fair market value. 

2. Sales of comparable assets - By checking out similar properties in your area, you are able to get an idea of what the FMV is. Estate agents will often have a roster of recent sales that they will be able to look at. 

3. Price to replace - If you research into how much it would cost to rebuild a similar structure, this can often be a way to inform yourself on what the FMV will be. 

4. Expert opinion - Another route you could look at for discovering your FMV is to hire a professional appraiser for a valuation. 

What is the current market value of my home?

In order to calculate the market value of home, there are a number of different factors that you will need to consider. These include: 

• The location of your property

• The size of your property 

• Your property condition 

• Whether or not you own a listed building 

• Any detrimental factors such as flood risk and subsidence 

You should also look into the wider factors that affect your home such as: 

• How close you are to certain amenities

• What the transport links are like in your area 

• School catchment areas 

Local properties 

When determining the fair market value of a property, you should then look at houses that have sold near you. You can use this as a good basis for discovering your property's worth on the market. Looking at online property portals such as Rightmove and Zoopla will be able to help give you a vague idea of the price. 

When looking at the different properties available, you should consider: 

• How do they compare to yours, e.g are they a similar size, location, or condition to yours 

• When they were sold 

• How much they sold for 

• The current estimated value 

This will help to give you a very rough outline of the price you can expect. This will only work if similar houses in your area have recently sold, otherwise, you will not get an accurate figure. 

Price Trends 

Next up you should look at the price trends in both your local area and nationally. This will help to paint a picture of not only what the property market is like on your doorstep, but also what it is doing further afield. 

If you are looking for a house price index to research, you should check out the Land Registry report. Through this report, you will be able to filter by: 

• The type of property - this will allow you to search through all the different types available to find ones similar to yours e.g. semi-detached, detached, maisonettes, flats, terraced houses, etc.

• Area - You will then be able to filter by country, region, county, and even local authority. 

• Date - You will be able to look at house prices as far back as January 1995. 

You will also be able to further refine your search by looking at the annual and monthly percentage change in house prices as well as the number of properties that are sold. 

Calculators 

fair market value calculator 

Another route you may wish to look at when determining market value of your property is to use free house price calculators. You can find many for free such as: 

• Zoopla

• Rightmove

• The Land Registry calculator 

However, it is worth noting that you may need to register with the site before you will be able to receive your market value. 

Shop around with local asking prices 

By looking at the local asking prices for similar properties, you will be able to get an idea of how much you could potentially get for your property if you sold it today, and also how often properties around you sell. 

You should be careful to use a variety of sources in order to get the best idea about the local housing market. 

Estate agent 

You may also want to invite three local estate agents round to your property to provide you with a valuation. Estate agents are able to provide you with an accurate valuation for free, as long as you are thinking about selling your home. 

You should be wary about overvaluing, as an estate agent may give you a higher valuation in the hopes of winning your custom, only for you to struggle to find buyers on the open market as you have priced your home too high. By using three agents, you will be able to get a more well-rounded figure for your fair market value. 

What is the difference between fair market value and valuation?

When people talk about the term 'fair market value, they are often using it intentionally. It is often lumped in with phrases such as 'market value' or 'valuation' which while sounding similar, they are very different terms. Fair market value is discussing the value of the property whilst considering the wider economic factors at play. A valuation is an approximate number of your home's worth, that looks at the property size, condition, and location.

What can the property buying company offer you?

Not to brag, but we like to think that we have plenty we can offer those who are looking to sell their homes fast and for free. Some of the benefits of selling through us include: 

As we are a cash buyer, we are unable to offer you 100% market value for your home, however, in return for a slight discount, we are able to offer a service that sells your home fast, free, and securely. We take away the stress that selling your home can bring, simplifying the process and allowing you to relax. 

Furthermore, when you sell with The Property Buying Company, you are in good hands. Don't just take our word for it, you can check out our Trustpilot, with over 1,000 reviews rating us as excellent. We are also proud members of the National Association of Property Buyers and The Property Ombudsman. 

If you are ready to sell your home fast and without the hassle that the open market can bring, get in touch today and fill out one of our free, no-obligation forms to receive your CASH offer, which we could have in your bank in as little as 7 days.