What's a home worth?

I meet people all the time who ask me the question, "What's my home worth?"   My favorite answer is, "It depends." 

We all know the definitions:  market value is the estimated price at which an informed buyer will buy in an arm's length transaction; assessed value is the value upon which taxes are assessed as determined by either a contract appraisal firm or a government official; appraised value is the value that an appraiser given directions as to the purpose of the appraisal (because the purpose matters!) reaches; replacement cost is the cost to replace the existing structure should the need arise.  Heck we can throw in estate value and, finally, sales price.  Then we can ask the question, how can you assign a value to a home when that's the center of your familial and emotional life? 

We didn't actually ask that question in the past unless we were going to sell the house or refinance...because it was our home. Now it's viewed as an investment, collateral, retirement fund...a commodity. 

So, taking into consideration today's definition of home as a commodity, I guess the question really is what do you want to do?  If you want to sell, how soon?  If you want to sell are you willing to invest a bit more to improve the condition or are you selling "as is"?  If you want to sell, how flexible will you be with showings, exposure, etc.? 

Let's take a few real life examples.  A bank owned property was recently priced so attractively that it had over 60 showings in the first three days it was listed and resulted in multiple offers.  The offer accepted was well over the list price.  The listing agent had been directed to price it so it would sell within 30 days, so the price was deliberately lower than anything around it had sold for in the last six months.  The "auction" atmosphere was deliberate. 

Another property that was listed was strategically done.  After a review of all the statistical information available, it was determined that the house should be price just below a price tier (e.g. $300,000 to $399,999, $400,000 to $499,999) that wasn't moving very well.  Although the home could have sold for more over a longer period of time, the seller agreed to price slightly (i.e. $2,000) below the price tier that wasn't moving.  It appeared to be well-priced, was shown quite a few times in the first few days and was sold at list price three days after it was listed.  Again, a type of auction atmosphere was created, but not a frenzy...only those who recognized it for the bargain it was priced below its fair market value. 

And yet another property was listed at a price that the seller wanted to net out of the property.  The price is reasonable based on comparable properties.  It's been listed for six months, is shown rarely (about once a month) and that's fine with the seller.  Their goals were different than the other listings mentioned. 

So, when asking the question, "What is my home worth?" be sure to explain what you intend to do with the answer and the timing that you have in mind in which to take that action.