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how do i find the fair market value of a home, so i can know if list price is fair & what to offer?

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November 14 2012 - McHenry
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When I'm representing buyers, I pull sold homes from our MLS and we evaluate those homes against the home they want to make an offer on to determine a fair starting offer. The Zillow Zestimates are not always accurate and can be +/- 10% either way.

Your best bet is to hire a buyer's agent in your local area to help you. Good luck!
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November 14 2012
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Thanks to everyone. All these answers have been helpful!
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November 14 2012
Ask your agent to do a Market Analysis for you of recent sales of comparable properties.  That is what I always do for my clients.  Its never quite apples to apples but you can weigh the pros and cons against the comps.  Location is always first and foremost, then I look at condition, square footage, year built, etc.  If its a 3 bedroom raised ranch, ideally you want to look at other 3 bedroom raised ranches but the data isn't always there so you need to adjust.  We use the MLS (multiple listing service) and can pull all that data for you.  Hopefully your agent will do diligence and make you feel comfortable with your offer.  You never want to "throw a number out there" without having something to back it up or you wont win.  Be sure to always make sure all permits, etc were pulled if/where applicable because that can come back to bite you if they haven't been.  Good luck to you!
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November 14 2012
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No, it is not a sarcastic answer.  Every estimate by any Realtor or appraiser will be different.  None of them really know the "fair market value", and some are better at estimating than others.  The more opinions you get, the closer you can come by using statistical methods, and by throwing out the estimates that are more to the fringes.

No two houses are identical in the identical area, with the identical neighbors, with identical maintenance conditions, with identical noise and traffic, so regardless of what recently sold comparables are used, and no matter what adjustment factors are used, it is still just an educated "guess".

And the "fair market value" becomes what you pay..., since that is how it is defined.  Most Realtor CMA's are about +/-12% off.  They don't even bother calculating their tolerance range as they don't consider it worthwhile and many don't know how to do it.  Remember, the list price given was from a CMA done by a Realtor, so if you trust Realtor CMA's, just pay the list price and forget your agent.
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November 14 2012
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Thank you!! We do have an agent. So we will ask her. Thanks!
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November 14 2012
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Was that a sarcastic answer? Or is there really that much involved? While FMV might have little to do with intrinsic value, I guess what I am asking is how can I determine a fair figure/price to offer without offending the seller. How can I determine what is the lowest I can go? Because I read that the seller will list above the fair market value (which, of course, they should if they want to make anything at all) and the potential buyer typically makes an offer close to the fair market value. Then, the seller will typically counter-offer with a figure almost right in between the original list price and the buyer's offer. So, I want to offer as low as possible to hopefully make that counter-offer as low as possible... without offending the seller and potentially losing out to another buyer. Yes, I know if you really love a home, a couple or few thousand dollars in either direction won't make that big of a difference. But for me, it makes all the difference in the world financially. And I really do like the home. So my ultimate questions is, how can I determine what a sensible and fair offer is?... What is the criteria and how do I get that info?
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November 14 2012
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You request 35 different agents to each give you a "free" CMA, and then throw out the top and bottom, and average the rest.  If that number is not good enough then you request 350 different agents to each give you a "free" CMA, and then throw out the top and bottom and average the rest.


Or, you "pay" for 5 appraisals from different appraisers, throw out the top and bottom, and then average the rest.

Even then, if you are in a "housing bubble", all the estimates of "fair market value" will be way too high, which is why there have been millions of foreclosures and millions of bankruptcies.  Present "fair market value" likely has little to do with "intrinsic value".
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November 14 2012
 
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