• Comparables (Comps)

Sometimes, getting an estimate of a properties current value is as simple as typing your address into an online real estate estimator, such as ‘Zillow’s Zestimate’.

The formula used by these sites calculate information from public data and data submitted by users to come up with an approximate value for your property or any address you enter. Considering factors such as location, current market conditions and any special features the property contains.

Rather than a specific number, you’ll receive a value range.  The more information you are able to enter about the property, the narrower the value range becomes. You can use many of the methods to determine the fair market value on your own, keeping in mind the DIY value will only be an approximate value range.

• Comparative Market Analysis (CMA)

A real estate professional you are working with can do what is known as a CMA. They select recently sold properties that are similar to the subject property, and in the same geographical area.

These are sometimes referred to as “3/3/3 CMAs”: At least three comparable properties, within a maximum of a three mile radius, sold within the past three months. None of the “3s” are chiseled in stone, but are pretty good gauges of current market value.

A second method to determine FMVs is to pay close attention to currently listed (vs. sold) properties. Including listed properties in the evaluation mix allows for an assessment of the most current competition and can lead to a decrease or increase in how much the “buy” or “sell” price for a property might be, compared to only sold properties.

• Broker’s Price Opinion (BPO)

A BPO is performed by a licensed appraiser, real estate broker or agent. A BPO can be either a full interior report or an exterior drive-by. The BPO should include taking pictures, garnering six comps (3 sold and 3 listed properties), as well as a drive-by of the neighborhood. The final BPO is used to support the real estate professionals' Fair Market Value (FMV) opinion.

• Appraisals

This is the process of developing an opinion of current fair market value, for real property and can only be conducted by a licensed professional appraiser.

Typically, the appraiser will issue a Uniform Residential Appraisal Report or URAR for standard residences (Fannie Mae Form 1004). The report requires four elements be included: clear, descriptive photos of the property and comparable sales used; exterior and interior inspection of the subject property; an exterior building sketch of the improvements that indicates the dimensions; a street map that shows the location of the subject property and of all comparable properties that the appraiser used.