Knowing your home’s value is important whether you are planning to sell, refinance or tap into equity. Determining your house’s worth requires analyzing comparable homes and the local market.

Online tools like home valuation calculators rely on public records and sales data to determine your home’s value. However, they may not take into account upgrades or improvements you have made to your home.

Assessed Value

Knowing how much your home is worth on a yearly basis helps you keep tabs on its value, and it can also help you make smart financial decisions. Home values can influence property taxes and insurance premiums, among other things.

A home’s assessed value is a yearly estimate of its worth, determined by the local tax district’s property assessor. The assessor uses information like your home’s location, size, number of bedrooms and bathrooms, and other amenities to determine its value in comparison to similar properties in the area. Then, it’s time to apply some local and state formulas to come up with an estimated value.

But, it’s important to note that assessed value doesn’t necessarily mean the same as market value. The assessment process doesn’t always produce apples-to-apples comparisons and there are many factors that could impact the estimate, from the quality of comparable homes to your home’s unique features.

If you’re not happy with your home’s assessed value, contact the assessor’s office and request an informal review. You may also be able to file for an administrative or judicial review, depending on your specific circumstances.

The appraised value of your home is an industry-standard measurement that’s often used by mortgage lenders and other parties to confirm your property’s worth. An appraisal is typically conducted by a licensed professional who takes into account your home’s location, overall size and layout, the number of bedrooms and bathrooms, recent sales in the area, and any upgrades or additions you’ve made to the property.

Using online home valuation tools can be a good way to get a general idea of your home’s value. These calculators use computer algorithms to analyze public data and generate an estimate for your property. But, these estimates aren’t based on the details of your home or its unique characteristics.

If you’re looking for a more accurate estimate, work with a real estate agent or an appraiser. They can take into account your home’s unique details, the market trends in your area, and the comparables that have sold recently to arrive at a more thorough estimate of your home’s value.

Appraisal Value

A home’s appraisal value is an estimate of how much a property would sell for on the real estate market. It’s usually determined by comparing your house to similar properties that have sold recently in the neighborhood. The appraiser will look at a variety of factors, such as the home’s size and features, the condition of the property and its location.

To find out how much your home is worth, you can enter your address into a free online home valuation tool or work with a real estate agent to do a comparative market analysis. These tools (also known as automated valuation models or AVMs) use public data and computer algorithms to calculate an approximate home value. If you’re thinking about selling your home, an accurate assessment is crucial to setting a listing price that will attract buyers. A home’s appraised value is also used when applying for a mortgage and calculating your loan-to-value ratio.

If you’re not ready to sell, an updated home value estimate can help you make better financial decisions. For example, if you’ve paid down your mortgage to 80% or more, you might be able to ask the lender to drop PMI (private mortgage insurance), which is typically required when you make a down payment less than 20%.

A professional real estate appraiser can perform a more thorough, accurate assessment of your home’s worth. They’ll tour your property, analyze the local real estate market and perform a detailed comparison of your home to others in the neighborhood. They’ll take into account the size of your home, its location and amenities, as well as other factors that impact your home’s appeal, such as curb appeal, renovations and upgrades, and the level of demonstrated pride in ownership.

A professional can also provide you with an estimated value of your home’s land, which is typically not included in your home’s overall value. A land appraisal is a separate process that can be performed by a licensed real estate appraiser or by an engineer or surveyor. For more information, check out NerdWallet’s guide to home value estimates and land appraisals.

Market Value

A home’s market value is the price it would sell for on the open market in a reasonable amount of time, taking into account a seller’s and buyer’s circumstances. It’s based on comparable sales and other factors such as the size, condition, location, and amenities of your home. A qualified real estate agent will do a market analysis of your home to determine its fair market value and set an appropriate asking price.

You can also get a rough idea of your home’s market value by entering your address into an online property valuation calculator. These sites use your home’s address to pull in data such as recent real estate transactions, the average sales price of homes similar to yours, and other publicly available information. While these sites can be helpful, they can give you a very broad estimate and are not always accurate. A professional real estate agent will take into account local market conditions, your home’s specific attributes and unique features and use all of this information to create an accurate estimate of your home’s worth.

Many buyers are willing to pay more for a home with certain features, such as an updated kitchen, a new roof, or other renovations. However, this doesn’t necessarily add up to a higher value. In a general sense, your home’s value is determined by its size and layout, proximity to amenities such as shops and restaurants, and overall neighborhood trends. Market conditions can affect your home’s value, with values rising in a sellers’ market and falling in a buyers’ market.

If you’re disputing a government tax assessment or disagreeing with an insurance company over coverage, your home’s value may need to be documented by a certified appraisal. This is especially true if you’re planning to sell your property or need to prove its value for an emergency situation such as a divorce or bankruptcy.

In the end, your home’s value is a matter of opinion and personal circumstance. However, knowing your home’s value is important so you can make informed financial decisions such as determining whether to sell your property or invest in other assets, setting an appropriate selling price, and making wise investments for your property’s future.

Equity

Home equity is a valuable asset that homeowners often use to pursue personal goals. It is the difference between a home’s market value and its mortgage balance, including other debts secured by the property (such as a home equity line of credit or second mortgage). Homeowners may calculate their home equity using several methods. A common method involves finding the current market value of the home and subtracting the amount that is owed on the mortgage (or other debts).

The home’s current market value can be obtained through a variety of sources, such as online real estate websites or by getting a professional appraisal. An appraiser will provide an unbiased, objective assessment of the home’s worth based on the latest data and market trends in the area. However, the cost of a professional appraisal can be prohibitive for some homeowners. For these individuals, an alternative is to contact local real estate agents who offer a free, comparable home valuation service.

There is no set timeframe for when a homeowner will reach maximum home equity. The value of the home is constantly changing based on supply and demand, neighborhood trends and other factors. To determine the maximum home equity, it is important to take into account the length of time that the homeowner has been in the home as well as the historical appreciation rate for the area.

Once the homeowner knows the maximum potential home equity, they can compare this number to their loan-to-value ratio (LTV) when applying for a home equity loan or HELOC. This ratio can help the homeowner determine if they have enough equity to fund home improvements, consolidate debt or make other large purchases. As a mortgage professional, you can assist your clients by providing them with this information and helping them apply for the appropriate type of loan based on their goals. You can also refer them to our free Know Your Equity calculator and projector, which will allow them to discover the combination of home price appreciation and prepayment required to reach specific equity goals.