Here’s everything you should know about determining your home’s value:
Why your home’s value matters
Both buyers and sellers will benefit much from knowledge of a home’s actual value. Buyers can find out the actual value of a home they intend on buying and use this info for leverage in negotiations. They will also need to know this in lieu of their mortgage application. Sellers, meanwhile, can correctly price their property before putting it on the market.
How to determine your home’s value
- Comparable sales
- Home appraisal
- Comparable market analysis
- Online valuation tools
If you want to figure out your home’s market value on your own, you may do so by researching on comparable sales (comps). In doing so, try putting yourself in the shoes of a buyer shopping for homes in your area should yours not be available.
Search for sites with MLS listings displayed and single out the ones most similar in location, size, and condition as yours. Make sure you have at least three valid entries in your comparable sales for a more accurate comparison.
One of the most accurate ways to determine your home’s value is by getting your home professionally appraised. Home appraisals are usually required by the mortgage lender and are made after the contract is signed. Because these are created by an unbiased third party, the home appraisal report is considered to be the true representation of your home’s value.
In the appraisal, a licensed and professional appraiser evaluates the features and characteristics of the house, the neighborhood, and the city it’s in. Included in the appraiser report is the comparison of your home to similar properties in terms of cost, listings, and sale. The appraiser will also take into consideration the home improvements, renovations or additions made to the property.
Typically made by your real estate agent, a comparative market analysis (CMA) gives an estimated value of your home based on current real estate market trends in your locale. Just like any other home valuation method, a comparable market analysis looks at the average price of recently sold homes that are similar to yours. Active and expired listings are also analyzed.
For buyers, a comparable market analysis helps you determine the home’s true value and whether it is worth purchasing or not. As for sellers, a comparative market analysis gives you a glimpse into the movement in the current real estate market, as well as the reasons behind these movements.
Go online and you’ll find a great deal of home value estimators from various real estate sites and lenders. While these online valuation tools aren’t as accurate as a full-blown home appraisal or comparable sales, these could still give you an idea of how much your home could be worth.
Online valuation tools like Zillow, Trulia, and Realtor.com take into account the square footage, bedroom and bathroom count, recent sales, and the average list price for homes in your area.