What is Your Home Worth?
What is your home worth?
It is a question asked by homeowners at property tax time, but the answer to the question really becomes relevant when the time arrives to put your home up for sale. The easy answer is your home is worth whatever a buyer is willing to pay for it. However, you can do much better than that by following five tips that help you gain an accurate value for the worth of your home.
Work with a Licensed Appraiser
When it comes time to assess the value of your property for taxes purposes, the county where you live sends out a professional to determine how much the property is worth. Most homeowners conduct a private appraisal of their properties to ensure the county does not return a lower than market value amount of worth. You need to use the same approach to assess the value of your home when the time comes to sell your house.
Ryan Lundquist, who owns a home appraisal company in Carmichael, California, says, “As an appraiser, my job is to give a value based on the needs of my clients. 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.” Lundquist added that an accurate home appraisal factors in the geographic location of the house, as well as property characteristics and the selling prices of comparable homes on the market.
Go Online for the Answer
All you have to do is type in “How much is my home worth” into Google’s powerful search engine to return a long list on online home value estimators. Nearly 25 percent of homeowners use some type of online tool to answer the question “What is my home worth.” Popular real estate sites like Zillow and Trulia offer home value estimators for free. By accessing public records and the last few years of tax assessments, an online home value estimator returns values generated more for marketing and lead generation purposes. This means using an online home value estimator should by a supportive research tool, not the only tool you use to calculate the value of your house.
Research Similar Homes
More than one half of American homeowners estimate the value of their homes by researching similar properties. Lundquist says homeowners need to use an “apples to apples” approach for comparative home research. “Just because the property next door sold doesn’t mean it’s a comp,” he said. Find the recent sale prices of similar house in the neighborhood and choose at least three of the prices to best resemble what you home is worth. You probably have to make minor adjustments to narrow down the correct value of your home. This can include adding or subtracting a bathroom and/or taking into consideration subtle differences in the interior decors.
Ask for a Comparative Market Analysis
Up to now, we have relied on tools that help us get some idea of the value of our home. It is time to call in the expert called the trusted local real estate agent. He or she conducts a more thorough analysis of your home by using the results of a comparative market analysis (CMA). Although not sanctioned by the county where you reside, a CMA provides a more accurate assessment of your home and surrounding property. You might be able to receive a CMA at a low cost, or the real estate agent conducting a CMA might bundle the cost of the service into other real estate services. Some real estate agents cut deals that offer a free CMA in exchange for homeowners hiring the agents to sell their houses.
FHFA Calculator
The Federal Housing Financing Agency (FHFA) offers a helpful calculator that uses what is called the “repeat sales method” for figuring out home values. With a database holding tens of millions of mortgage transactions, the FHFA monitors home value changes, and then compares the changes to similar properties in the same area. This is an effective tool to use when you start researching the value of your home.
Selling your home is the most important transaction you can expect to make in your life. Make sure you come to the negotiating table armed with the most accurate sales information that answers the question “What is your home worth."
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