4 Right Ways to Determine the Value of Your Home

Posted by Casandra Properties on Tuesday, January 14th, 2020 at 8:15am.

Thinking of putting your house on the market? If so, your first step should be to find out how much you can get for it.

Other than sale purposes, calculating your home's value has many other benefits. For starters, it gives you a clearer picture of your home's equity and investment strength. This comes in handy in evaluating your financial health.

Not sure how to determine property value? Here are 4 simple ways to make this task as painless as possible.

1. FHFA HPI Calculator

FHFA's house price index calculator is a great way to get a quick home valuation. This tool uses a repeat-sales method. It monitors millions of mortgage transactions, using them to estimate shifts in home prices in any market.

Now, the HPI calculator isn't perfect. For instance, it only looks at conforming mortgages and doesn't consider inflation. Still, if your loan fits the bill, there's no easier way to find out how your house has appreciated with time.

2. Comparative Property Valuation

Most U.S. homeowners estimate their house's value by looking at comparable properties. Getting an accurate comp requires keeping track of relevant factors. These include size, upgrades, condition, location, and so on.

Once you have at least three valid comps, you'll need to adjust for differences. Depending on your market, add or subtract value to or from the comps. A rough estimate of your home's value will be between the highest and lowest comps.

3. Online Valuation Tools

These tools are best known as automated valuation models or AVMs. They predict your home's value by using public records and mathematical modeling. Your public records include tax assessments and property transfers.

Now, most AVMs fall into two groups. The ones offered by major real estate sites use a "confidence score" to calculate market value. For example, a confidence score of 85% means that the estimate is within 15% of market value.

Professional-grade AVMs come with their own confidence scores. Needless to say, they're likely to be more accurate than the real estate sites. That said, you should still have an expert make sense of any online valuation.

4. Professional Appraisal

As you may know, lenders always require a home appraisal before issuing a mortgage. The good news: you can hire an appraiser at any time. You can ask for the current market value or the value for a specific date in the past.

When it comes to estimating property values, the appraisers take note of your market and house characteristics. Then, they look at similar houses in your market for key factors such as cost, sales, and depreciation.

More on How to Determine Property Value

Once you evaluate your home's value, you'll know what price to put on it. You'll also have greater control over refinances and insurance premiums. By proving an assessment is too high, you may even be able to lower your annual tax bill.

Want to know more about how to determine property value? Trying to catch up with the latest real estate trends? Check out our Residential Real Estate section!

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