Before we can figure out how much a home is worth, there are a few things we need to understand. To figure out home worth, we need to know what the “home market value” is. Believe it or not, home market value has nothing to do with how much your monthly mortgage payment is. Or even how much you value your home.
Basically, the home market value of a house is how much a buyer is willing to pay. Stepping back and trying to view your home as a potential buyer would is a critical part of learning just how much your home is worth.
Evaluating comparable properties
One of the best (and most common!) ways to find your home value, is to compare it with other properties on the market. Particularly properties nearby and similar in size, etc. Doing this gives you an idea of what your house is worth and, in turn, how much you can sell it for.
You can find this information by browsing websites with current listings or sites with past house sales, or we can do it for you with one simple report. Your local newspaper my even have current or past listings in it. Keeping an eye out for house sales in your neighborhood will also be helpful in making sure you stay up to date. If you take one or two of these ideas and put them into action, you’ll be off to a good start!
Getting a comparative market analysis (CMA)
A comparative market analysis is a lot like a jigsaw puzzle. As The Close explains it, “Each piece represents a different market element you need to consider in determining the value of a property.”
The first step in doing a comparative market analysis is gathering all the data you can for the property you’re working with. And we don’t just mean a little data. We mean everything. For starters, The Close suggests retrieving whatever data you can find from the following list: “Location (street, neighborhood, municipality, county), total square footage, number of bedrooms and bathrooms, acreage (if privately owned), year built, recent renovations, interior finishes of note, any extraordinary features (swimming pool, pole barn, etc.).”
Once you’ve obtained all the information you can for those categories, we suggest you go ahead and read the entire article from The Close to figure out what step to take next.
Hiring a professional appraiser
Hiring a professional appraiser is a smart move when selling your house. But an even smarter move is hiring an honest (and trustworthy!) appraiser.
Here are a few things you should consider or research before hiring an appraiser. You should always check the credentials of the appraiser you want to hire. Also, making sure their license is valid is a smart move. One other thing to research is whether they have good reviews and feedback. And you can always use the Better Business Bureau records to look for complaints of unethical behavior or the like.
SF Gate suggests that you, “locate appraisers online using the Appraisal Institute search tool…Find appraisers who are located in your state. Make a list of appraisers who are in close proximity to your home. Hiring appraisers who are in your area may provide a more accurate valuation due [to] a greater degree of familiarity with your neighborhood.”
Avoiding sentimental worth
As hard as this may be, it’s important to keep emotions out of the picture. Because you’re the owner of this house, it will be easy for you to see many reasons your home is worth a lot. But everyone else won’t be looking from your vantage point, so be sure to keep this in mind as you get ready to sell your home. And if you need to know your home value because you’re looking to sell, read this article from the blog, so you know the best ways to stay warm and cozy while selling in the winter. Good luck!
Using the FHFA house price index calculator
Another step in finding the value of your home is using the FHFA house price index calculator. While it doesn’t give you a totally personalized answer based on your house, it does help in getting a rough estimate of what it’s worth.
The disclaimer at the bottom of the website reads, “When using the House Price Calculator, please note that it does not project the actual value of any particular house. Rather, it projects what a given house purchased at a point in time would be worth today if it appreciated at the average appreciation rate of all homes in the area.” Generally, you could assume that your house is appreciating at the same value. However, as we’ll talk about later, hiring an actual appraiser will get you more specific answers to your home’s worth.