The recent housing market has been red hot, driving up prices and straining an already low inventory of homes. Yet, there are signs that the market may cool off a bit in the next year. That doesn’t mean major drops in home sale prices or a glut of inventory, but it may mean fewer bidding wars.

Of course, for the prospective home seller, figuring out the fair market value of their home comes before anything else. Since home prices skyrocketed over the last few years, though, many homeowners don’t know the market value anymore. If you’re wondering how to figure it out, keep reading for some tips on how to determine fair market value.

Look at Recent Sales

One easy way you can get a ballpark estimate on your home value is by looking at recent sales in your neighborhood. Those are often a very good indicator of the house value where you live. You can often find this information listed on real estate sites.

You should look for homes that are similar to yours in terms of size, rooms, and amenities.

Get an Appraisal

Another way you can get an idea of your home’s market value is with a professional appraisal. Make sure that you ask for the report after the appraisal, since that may give you ideas for modest renovations before you list the property.

If you want a more accurate sense of your home’s value, you can get several appraisals from different appraisers or appraising businesses. You can average the three values for a fairly accurate sense of what your home is worth on the open market.

Understand Local Market Conditions

Even if home prices are high on a national level, it doesn’t mean you can expect the same to hold true everywhere. Even in a hot real estate market, some areas will still have slow sales with lower prices. If you live in one of those areas, you should assume that your home’s market value will run lower.

Work with a Real Estate Agent

A real estate agent or company, such as Hatchrealty.com, will often give you a suggestion for what they think your home is worth. They’ll often run a comparative market analysis to arrive at that number, so it’s not a shot in the dark. Some realty companies ever provide a home valuation tool right on their websites.

Fair Market Value and Your Home

Everyone who sells or even thinks about selling their home wants fair market value for it. With so much change in the real estate market in recent years, though, knowing that value is often trickier than sounds on the surface.

Fortunately, you have several options available that can help you arrive at your home’s fair market value. You can investigate recent sales in the area, get an appraisal, or work with a real estate agent. Just keep an eye on local market conditions, as those can affect home values.

Looking for more home selling tips? Check out the posts in our Money Smarts section.