Have you been wondering what your home is really worth? The short answer is easy: a house is worth whatever someone will pay for it. The long answer, however, depends on the market and whether you’re asking a lender, an agent, or a county tax assessor.
Knowing how to calculate your home’s value with the help of online tools and trained professionals better prepares you to buy, sell, refinance, tap into your home’s equity, or even negotiate lower property taxes.
Here are five different ways to determine the true value of your home:
Use Online Valuation Tools
According to a recent survey, 22% of U.S. homeowners who determined their home’s value used an online estimator. The technical term for these tools is “automated valuation model,” and they’re generally offered by sites like Zillow and Redfin. While these tools are free and easy to use, they’re generally for marketing and lead generation purposes, and the accuracy can be watered down.
Comparative Market Analysis
Asking your local real estate agent for a comparative market analysis, or CMA, is a great way to dive deeper into your home’s value. A CMA provides an agent’s evaluation of the home and market to provide an estimate of value, typically for listing purposes.
FHFA House Price Index Calculator
The Federal Housing Financing Agency’s house price index (HPI) calculator applies a more scientific approach to AVMs. It uses the “repeat sales method,” armed with millions of mortgage transactions gathered since the 1970s.
While lenders require an appraisal before they’ll approve a mortgage, you as a property owner can hire an appraiser to estimate home value at any time. 28% of U.S. homeowners determine their home’s value through an appraisal, which consists of evaluations of the market, property, and comparable properties.
Evaluate Comparable Properties
Pulling comps (comparable properties) is a great way to determine market value without paying an appraiser, but be careful- just because the property next door sold doesn’t mean it’s a comp. Think about which properties would interest a buyer if yours weren’t available. Look for similar size, location, condition, and upgrades.