Knowing your home’s value can help you make smart financial decisions. It’s important to know what your house is worth before selling, putting it up for rent or taking out a mortgage loan.
A top real estate agent can provide the closest estimate of your home’s market value by physically viewing the property and analyzing its features. A free online valuation tool can also give you a rough idea.
Appraisal
One of the most important things homeowners need to know is how much their home is worth. This value is used in a variety of ways, including determining how much to list for the property on the market when it comes time to sell. It is also useful when it comes to deciding on loan amounts and terms, such as with a home equity line of credit (HELOC).
The appraisal process has many factors that affect the final valuation. Some of these are obvious, such as the overall size and number of bedrooms and bathrooms. Other important aspects include the location of the house – being close to schools, stores and other amenities will typically increase the value. The condition of the house is also a key factor, as will any repairs that have been completed or are needed.
In recent years, housing values have surged across the United States, helped in part by low-interest rates and limited inventory. However, some experts believe that home prices are beginning to plateau and may even begin to decline in the near future.
Knowing your home’s value is a necessity for anyone interested in real estate. Whether you’re planning to buy or sell your home, knowing its value will help you plan your financial future. There are a variety of ways to determine your home’s value, from using online tools like HomeLight’s home valuation estimator to having an appraiser visit your property and prepare a report.
A professional home appraiser can provide the most accurate assessment of your home’s value. They will review the data from public records and compare your property to similar homes that have sold in the area — known as comparable properties or comps. They will also consider any improvements or renovations you have made, such as adding a new kitchen, master bedroom or bathroom.
Lenders require an appraisal before approving a mortgage. You can increase your chances of getting a good appraisal by making simple home upgrades, such as painting the front door or improving curb appeal. You can also accompany the appraiser on a walkthrough of your home to point out any important features and explain any recent improvements, such as the addition of an air conditioning unit or updated kitchen.
Assessed Value
Whether you are selling your home or taking out a mortgage, understanding the value of your property is important. There are two types of home values: assessed value and market value. Assessed value is a number that a local government assigns to your property and is used to calculate your annual property tax bill. Local governments often base their assessments on the market values of comparable properties in your area. However, you can appeal your assessed value if you believe that it is inaccurate.
As a result, assessed value can differ significantly from the actual market value of your home. This can lead to a difference in your property taxes, which can be a significant financial impact on homeowners.
The assessed value of your home is based on a number of factors, including the state of the real estate market in your area and your home’s features and upgrades. Your home’s location also plays a role, as properties in desirable neighborhoods generally sell faster and for higher prices. The condition of your home can also impact its assessed value, as a property with broken appliances or structural issues may be less attractive to buyers.
A professional home appraisal takes all of these factors into consideration to determine your home’s true market value. This value is a key piece of information for both homebuyers and sellers, as it can help determine the best price to list your home for on the housing market. Additionally, a professional appraisal is typically required by mortgage lenders before they will approve a loan for your property.
There are also several online tools that can give you an instant estimate of your home’s value, such as the Federal Housing Finance Agency’s housing price calculator. These estimates are based on public records such as your home’s square footage, sales prices of comparable homes in your area and local real estate market trends. However, they do not consider your home’s unique features or any recent upgrades you have made.
Assessed value is an important figure to understand, but it is not the same as the market or fair market value of your home. A professional appraisal is the best way to get an accurate assessment of your home’s value.
Market Value
Whether you’re thinking of selling your home, evaluating mortgage loan options or simply updating your net worth, it’s important to understand what your house is currently worth. A number of different methods exist for determining a home’s value, including online valuation tools like the Zillow Zestimate and the Federal Housing Finance Agency’s (FHFA) house price index as well as an in-person Comparative Market Analysis conducted by a local real estate agent.
Online valuation tools rely on public records, user-submitted data and property listings to compile an estimate of your home’s value. They are often able to analyze millions of pieces of information instantly and produce a result almost immediately.
The problem is that these estimates are not based on your specific home; they use comparable homes that have sold recently in the area that have similar features to your own. For example, they may not take into account the number of bedrooms and bathrooms in your home or upgrades you have made that make it more appealing to buyers.
An in-person home valuation by a real estate agent is a more accurate way to determine your home’s value. A top-performing local agent will conduct a comparative market analysis of your property to get the most precise estimate possible. They will analyze sales of comparable homes in your area, recent price trends and current real estate market conditions to come up with a fair estimate.
Another factor to consider is that your home’s value can fluctuate from day-to-day depending on the state of the local real estate market and other factors such as supply and demand. You should also keep an eye on your home’s value if you have a low-down payment mortgage so you can see when it makes sense to ask for PMI (private mortgage insurance) to be removed from your mortgage.
A few ways to help your home’s value increase include basic curb appeal, simple landscaping and decluttering; making small improvements; investing in larger upgrades; and timing your sale to coincide with the best time of year to sell in your area. In addition, if you have a substantial amount of equity built up in your home, it’s sometimes a good idea to refinance and pull cash out.
Mortgage Loan Value
The mortgage loan value of your home is how much you owe on your mortgage in relation to the current market value of your property. This is an important figure to know, especially if you’re thinking about selling your house or applying for a refinance. A mortgage loan value below the current market value means you have a positive equity position, which can help boost your chances of getting a better deal on a new mortgage or refinance. On the other hand, if you’re still paying off your existing mortgage and the value of your house is dropping, you could end up underwater on your mortgage.
Figuring out the value of your home is an important step to take before listing it on the real estate market or applying for a refinance or home equity product. There are a number of different ways to estimate your home’s value, including online valuation tools, professional appraisals and comparing sales data. Each method has its own benefits and drawbacks, but they all can be useful for determining your home’s value.
Online valuation tools like Zillow’s Zestimate and the Federal Housing Finance Agency’s house price index provide a ballpark estimate of your home’s value based on a few assumptions. They can give you a quick and easy-to-use estimate, but they aren’t always accurate. For example, the Zestimate has a median error rate of 7.5% and doesn’t take into account home improvements or average appreciation rates in your area.
A professional appraisal is a more thorough assessment of your home’s value conducted by a qualified and credentialed appraiser. It takes into consideration your home’s features, location and recent comparable sales in the area to determine its value. This is a vital figure for mortgage lenders, and it can also be helpful for homeowners seeking to appeal their property taxes or if they’re considering selling their homes in the future.
Lastly, comparing your home to the sale prices of similar properties in your neighborhood is a simple way to estimate its value. Keeping track of these sales can help you understand your home’s competitiveness in the real estate market and how it compares to others nearby. This can help you decide how much to ask for your home when you’re ready to list it on the market.