Be realistic. Most sellers think of their house as being worth more than it is. Oddly, when these sellers become buyers, the new house is worth less than it really is. Therefore, don't take it personally when your castle on a hill is someone else's dump on the hump.

Also remember that the current value of a home is not based on what the current owner paid for it. Buyers should not lowball an offer to buy a home simply because the owner paid much less than the current market value. And sellers shouldn't set their asking price too high simply because they paid more than the current market supports. In fact, even if a buyer is willing to purchase a home at an inflated price, they may not be able to secure a mortgage if the lender's appraisal report does not support the value.

Being realistic works to your advantage. If you are truly serious about buying or selling, realistic pricing helps. For example, if your home for sale is priced well above the market value, buyers will ignore the property. Your lawn sign will be ignored as it weathers in the sun. A stale property is also ignored by other Realtors who tend to focus more on new properties.  You may think that interested buyers "can always make an offer", but if the home is overpriced, potential buyers looking in a lower price range will never see it. Those who can afford a home at your asking price will soon recognize that they can get better value elsewhere. 

2. How can a Realtor help you determine the value of your home?

First, remember that the value of your home is what people are willing to pay. Nothing else matters. Ask your Realtor for "CMA".

CMA stands for Competitive Market Analysis. Real estate agents present CMA's to clients to assist them to determine the value of a home they intend to buy or sell. A CMA is not a formal representation of value; it is not an appraisal, nor will it be accepted by a lender considering a prospective mortgage.

While the content of agents' CMA's vary, their purpose is to compare the value of the subject home to other comparable homes in the vicinity. Properties currently on the market, usually selected from the local Multiple Listing Service database. Remember that these are asking prices which may not reflect the sales prices which the properties will realize. Also included in the CMA are properties which recently sold as well as those which recently failed to sell.

If possible, use you knowledge of the locale to determine whether or not the CMA includes really comparable properties. If it does not, the conclusions will be faulty. But if the comparable properties are well chosen, the CMA will present you with a measure of the entire market: current asking prices of similar properties for sale today, successful selling prices of homes just sold, and, through properties which failed to sell, unsuccessful and unrealistic selling prices.

3. When should you get an appraisal?

When owners can not agree either because of estate issues, or marital break up, an appraisal may be required. A report prepared by a licensed appraiser is the most formal approach to establishing a home's value. Of course, an appraiser will typically charge you $300 + for an appraisal.

The reason is objectivity: since the appraiser has no prospective role in an upcoming transaction, their opinion should be detached and objective. This objectivity has legal value.