Are you wondering what your house or a house you might buy is worth?
The easy answer is that a house is worth whatever someone is willing to pay for it. In reality a home’s value depends on the market and whether you’re asking a lender, a realtor or a county tax assessor. Understanding how to estimate your home’s value with the help of online websites and trained professionals puts you in a strong position to buy, sell, refinance, tap into your home’s equity with a line of credit or loan or even pay lower property taxes. Following I discuss the top 3 ways to find your home’s value.
How to find your home’s value
Get a Comparative Market Analysis (CMA)
When you’re ready to get a clearer picture of your home value, you can ask a local realtor for a comparative market analysis, or CMA.
A CMA is an estimate of a home’s value based on recently sold, similar properties in the immediate area. Real estate agents and brokers create CMA reports to help sellers set listing prices for their homes and in some cases to help buyers make competitive offers.
Local real estate agents may provide a CMA for no cost. This allows the potential seller to meet the agent and help determine if the seller is willing to give the realtor their business.
Use Online Valuation tools
Searching “how much is my house worth?” online dozens of options for determining the value of a home. The technical term for tools that sires use is automated valuation model, or AVM. As previously mentioned, Zillow.com, Realtor.com and Trulia.com are a few of the most popular sites for determining a home’s value.
Use online sites and apps, comparable property values and appraisals to determine a home’s value and buy, sell or refinance with confidence. The top 3 most used sites are
- Zillow.com
- Realtor.com
- Trulia.com
“Most AVMs on real estate sites are generally for marketing and lead generation purposes,” says David Rasmussen, senior vice president of operations at Veros Real Estate Solutions. “They’re tasked with returning a value for just about every property even when data is limited. And in doing so, they water down the accuracy.”
The AVMs used by lenders and realtors are different. These tools use a “confidence score” to help determine how close the automated valuation model provider thinks the home’s estimate is to market value. A confidence score of 90% means the estimate is within 10% of market value.
“Professional-grade AVMs with confidence scores linked to accuracy are a step up from the real estate sites”, Rasmussen says. But you should always talk to a local realtor to get more insight into any online home value estimate.
Hire a Licensed Appraiser
Lenders require a home appraisal before they will approve a mortgage. A property owner may also hire a licensed appraiser to estimate their home’s value at any time. (Take note of hire.)
“As an appraiser, my job is to give a value based on the needs of my clients,” says Ryan Lundquist, owner of an appraisal company based in Carmichael, California. “Sometimes clients want the value for a date in the past, and other times it’s a current market value for a refinance or purchase.”
A few things appraisers evaluate:
- The Market:
- Region, city and neighborhood where a home is located.
- The Property:
- Details of the property including the house, improvements and the land it sits on.
- Comparable Properties:
- Sales, listings, vacancies, cost, depreciation and other factors for similar houses in the same market.
This information is combined to create a final estimate of value for the home and delivered in an official report.
Why knowing your home’s value is important
“Knowing your home’s value allows you to evaluate what you can afford, determine whether a listing is priced appropriately and decide how to price your own home”, says Gayle Weiswasser, senior vice president of marketing and communications at Homesnap.
The value of finding a home’s value doesn’t end with a purchase or sale. Refinances, home equity lines of credit, insurance premiums and annual property taxes are all based on home value.
Determining your home’s value offers greater control over these processes. One thing many individuals don’t realize is that property taxes are almost always open to appeal. If you can prove your tax assessment is too high by pulling comps, you may be have a case for a lower tax bill.