4 Ways to Determine Your Home Value

Selling your home can feel exciting and scary—often at the same time. As you get started, one of the first questions you’ll probably ask yourself is, How much is my house worth?

It’s super important to find an accurate value of your home because getting the price wrong could cost you tens of thousands of dollars. And you don’t want to lose sleep at night wondering how you could have priced your house differently—seller’s regret is real!

But don’t worry. We’ll show you how learning the facts about your house and market, using a home value estimator, and working with a real estate agent will help you determine the value of your home so you can sell your house with confidence.

4 Ways to Know How Much Your Home Is Worth

Here are four easy steps that will help you understand your home’s market value:

1. Work with a real estate agent to find the most accurate price.

Working with an agent is the best way to get an accurate estimate for how much your home is worth. If you’re ready to sell your home, contact a real estate agent ASAP—they’ll have the best info to help you decide on the right price.

That’s because real estate agents can run a comparative market analysis (CMA) for your local area by looking at factors like location, size, age, style and the market conditions of similar recently sold homes.

Plus, a good real estate agent will take the time to look at your home in person. They’ll consider the landscaping, the condition of the house, any upgrades you’ve added, and anything else that isn’t listed in public records but could make a real difference to potential home buyers.

Agents use the power of real-world experience to compare your home’s nitty-gritty details to recent sales and current listings. No computer can do that, and your success as a seller depends on it.

2. Enter your address into a free online home value estimator.

Looking for the easiest way to gauge how much your house is worth? Try entering your address on a website that will give you an estimated market value.

Online tools like these put an estimate together by looking at the sales of similar homes in the area, local tax assessments, and whether homes in your area are increasing or decreasing in value over time.

In addition to a value estimate, many of these sites will give you extra details about your home, like:

• When the home was built
• Square footage of the home
• Square footage of the lot
• Info on your heating and cooling systems
• Number of parking spots
• How much each previous owner paid for the home

While these websites can be super helpful, you shouldn’t just look at the number you get and slap a price on your house. You still need to hire an agent and dig a little more—this is just a starting point.

Plus, the estimates are only as reliable as the amount of public record data the real estate websites can access. The less data gathered for your particular neighborhood, county and state, the less you can depend on the number you see.

3. Learn the facts about your house.

Your home’s market value is simply the amount buyers are willing to pay for it. But because you probably have a strong emotional attachment, it can be difficult to see your home the way a buyer would. After all, you may think your oldest kiddo’s handprints in the front porch concrete are cute, while a potential buyer will likely see them as just one more thing to fix.

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To stay objective, go through this list and see how your home holds up.

• Location: Is your house in a desirable part of town? How close is it to highways and shopping centers?

• Safety: Does your neighborhood have sidewalks, underground electrical lines and a low crime rate?

• Curb appeal: Is your house pretty to look at? Or is it an outdated eyesore?

• Square footage: How big is your home? Does it have any weird layout issues?

• Number of rooms: Does the ratio of bathrooms to bedrooms make sense?

• Updated appliances: Does your home still sport a harvest gold stove from the 1970s? Will the buyer need to plan for the cost of a new fridge, dishwasher or other items?

• School district: How are the schools rated in your area? Are there multiple options? If you’re not sure, try online resources like greatschools.org.

4. Research your local market.

Finally, it can also be helpful to dig into the trends in your local real estate market. Your agent can give you some great answers on this topic, but you can also learn a lot with a quick Google search.

These are the areas you’ll want to explore:

• Mortgage interest rates: A mortgage is a huge financial commitment, so a high interest rate will keep some buyers from pulling the trigger.

• Time of year: Homes just sell better during certain months than they do in others. For example, most buyers won’t choose to move during the middle of the holiday season or after the school year has started. Expect to get more or fewer offers depending on the time of year.

• Supply and demand: If a ton of homes are sitting on the market, that means you’ve got competition. On the other hand, if interested buyers outnumber “For Sale” signs in your area, raise the price like the savvy seller you are!

• How similar homes in the area have sold: How much are people willing to pay for a home like yours in your neighborhood? Are there many foreclosures in your area? This will give you a lot of insight into how desirable your home may be—or how much someone might be willing to pay.

Why It’s Important to Know Your Home’s Value

Knowing how much your house is worth helps you sell it for the right price from the start. Not understanding your home’s value could lead you to undersell or oversell.

Price your home too high and buyers will pass you up without ever stepping through the door—which could end up forcing you to slash the price later. Price it too low, and you could lose thousands of dollars. The right price gets you the most money in the least amount of time.

Home value is also important in helping you make decisions when it comes to handling things like:

• Homeowners insurance
• Property taxes
• Refinancing
• Private mortgage insurance (PMI)

How Often Should I Check My Home Value?

Getting an idea of your home value at least once a year could be useful. But you probably don’t need an expert’s opinion each time—unless you’re doing something big like selling or refinancing.

Still, keeping a pulse on a yearly basis could help you save money. For example, if you bought your house with a down payment lower than 20%, you’re probably paying for PMI—an insurance that protects your lender (not you) in case you stop making monthly payments.

If your home value goes up to the point where you now have 20% or more equity in your home, you can ask your lender to get rid of PMI and save yourself a ton of money!

Checking the value of your home can also help you make sure your homeowners insurance policy is big enough to cover the full value of your home.

Fair Market Value vs. Appraised Value

Before we wrap up, let’s unpack two easy-to-confuse definitions of home value: fair market value and appraised value.

Fair Market Value

This is a fancy term used in the real estate biz to describe a home price that both the buyer and seller agree is fair.

Like we talked about earlier, asking an experienced real estate agent to perform a comparative market analysis is the absolute best way to determine a fair market value for your house.

Appraised Value

This is how much your mortgage lender thinks your home is worth. A licensed professional probably did an appraisal when you first bought your house. And your buyer will probably do another one when you sell the house.

An appraised value is based on things like your home’s age, location, square footage, number of bedrooms and bathrooms, upgrades, and recent sales in the area.

This price is more important for mortgage lenders and taxes and doesn’t always end up being the same amount as the sales price. But if the appraisal is much lower than your sales price, it might send your contract with a buyer back to the drawing board—lenders don’t want to loan money for a home if the sales price is more than the appraisal.

The Bottom Line

Whether you’re planning to stay put for years or sell your home in the next few months, it’s important to understand what your home is worth and how that impacts you as a homeowner.

With the four steps we walked through, you can find out what your home is worth in no time. Here’s a recap:

1. Work with a real estate agent to find the most accurate price.
2. Enter your address into a free online home value estimator.
3. Learn the facts about your house.
4. Research your local market.

If you’re thinking about putting your house on the market soon, this is a great way to start the process!