Fair Market Value (FMV)
To determine Fair Market Value of a property we use a comparative market analysis for this purpose. You will want to have a Real Estate agent pull 4 or 5 comparable sales (comps). These must be sales in the last 6 months and not just listings. They should be within a 3 – 5 block area of the subject property you are looking at. You will need to compare all of the following information with each of them. Your Realtor can do this analysis for you or you can do this using the example worksheet below.
Fair Market Value Worksheet
Criteria |
Subject Property |
1st comp |
2nd comp |
3rd comp |
4th comp |
5th comp |
Prop. Address |
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Sale Price |
FMV Price |
150k |
152k |
148k |
149k |
189k |
Square Footage |
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Lot size |
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# of Bedrooms |
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# of Bathrooms |
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Days on Market |
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Taxes |
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Basement Sq. Ft.
% Finished |
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Special Features
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This comparative market analysis example shows four good comps and one that is out of range. The property that sold for 189K is not in the same range as the others. We would throw that property out because that property would skew the facts of what we can sell that property for whether we currently own the property or are looking to purcahse it to fix up and resell. You still have four good comps. You want to have at least three good comparables. This properties FMV is about $150,000.
The next thing we want to do is to determine the rehab costs for this property that will help it to sell at fair market value. You can do this by taking note of anything in the property that needs to be fixed and then talking to a trusted contractor or go to a home improvement store and talk to someone in customer service about materials needed, material costs, and labor time for fixing the issue. Then add up the hours and the cost. (For every five days estimated add one day for time that was not anticipated). Here is a simple chart to help figure that. The final rehab costs need to be subtracted from the fair market value determined on our comparative market analysis to find out what we should buy or sell this property for.
Property Address _______________________________________________
Materials Needed for Project |
Cost of Materials |
Labor Time |
Miscellaneous |
$500-$1000 |
Sum / 8 days + 20% |