March 30, 2018 OSMH Team

How Do You Estimate Your Home’s Value?

If you want to know the value of your house, chances are that you are planning to sell it. In short, the value of your house is what a potential buyer is willing to pay for it. For a more detailed answer, you need to go through this post.

The long answer will be different if you consult a county tax assessor, an agent or a lender. Knowing how to figure out the value of your house with the help of trained, experienced professionals and a myriad of online tools can get you ready to sell your house for top dollar.

Let’s take a look at 5 ways to estimate the value of your home.

home value estimate

  1. Use Online Tools

If you search for “How much is my home worth?” Google will show tons of online tools that can be used to get an answer. Technically, these tools are known as Automated Valuation Models or AVMs. Usually, real estate sites and lenders offer these tools.

These tools make use of public records, such as tax assessments, ownership deeds, and property transfers to give you an estimate of your home’s value. They also consider the listing prices and recent sales of the real estate in your area.

But the million dollar question is, Do these tools offer accurate estimates? The short answer is No.

The majority of these AVMs should be used for lead generation and marketing purposes only. These tools will give you an estimate for any property even if you don’t provide much data. As a result, they end up compromising on accuracy.

However, it’s important to keep in mind that real estate agents and lenders use different tools. These apps have a “confidence score” that makes them more accurate.

While using an online tool can give you a general idea of the worth of a property, relying only on these tools is not a good idea. You still need to look for other options.

  1. Get A Competitive Market Analysis or BPO

If you are serious about your home valuation, go ahead and consult a real estate agent for a BPO, which is short for a broker price opinion.

Although not as accurate as an appraiser, a BPO is a combination of an agent’s opinion of the market and home for providing a more accurate value. Usually, a BPO is done for the purpose of listing.

In the same way, a Competitive Market Analysis (CMA) is done by an agent based on the recent sale value of other properties in the neighborhood that share similar features.

Your real estate agent may offer a CMA or BPO free of charge. But keep in mind that they may offer this service for free with the hope of working with you when you sell your house.

home value estimate

  1. Try The FHFA Calculator

If you want to use an AVM to estimate the worth of your house, despite the fact that it is not very accurate, you can do so to get a quick estimate. For this, we suggest that you try the House Price Index (HPI) of the Federal Housing Financing Agency. This calculator uses a scientific approach to give an estimate.

According to Will Doemer Armed, an FHFA senior economist, the FHFA monitors the change in the value of a house from one sale to another. And then the calculator gives an estimate of how the values go up and down in the market.

This may sound quite appealing to you, but know that the HPI considers conforming mortgages. Besides, the calculator is not “calibrated” to account for the change in inflation and other factors.

According to Doemer, if you have a conforming or conventional loan, you can use the tool to figure the increase in the value of your home over time.

  1. Go For a Professional Appraiser

If you are thinking of applying for a mortgage, know that lenders will require an appraisal. You can hire a professional appraiser to know the estimated value of your house at any time.

The things that the appraiser will consider for appraisal are listed below:

  • The city
  • Region
  • Neighborhood
  • Characteristics of the home
  • Comparable properties
  1. Evaluate Comps

AVMs and appraisals have one thing in common: they take into account the current sales value of similar houses during an evaluation.

If you don’t want to pay an appraiser for the evaluation of your home, you can pull comps (comparable properties); however, be sure to use good judgment.

When using this approach, make sure you compare apples to apples. For instance, think about which other houses would grab the eyes of potential buyers if your house wasn’t on the market. Consider similar upgrades, condition, location and size.

To start off:

  • Check out a website that gives a list of recent sales, such as a local MLC service. This will give you a list of comparable houses in your area.
  • In case limited data is available, you should consider listing prices. However, keep in mind that the figures may not be realistic.
  • Be sure to get a minimum of three comparables to estimate the value of your property.

Aside from these, make sure you add to or subtract from the value based on the number of bedrooms and other features of your house and those of the other properties.

Importance of a home valuation

If you know the value of your house, it will be easier for you to price your home. Aside from this, you can enjoy a number of benefits by finding out the value of your house. Annual property taxes, insurance premiums, and refinances are all calculated based on the value of a property.

You can have better control over these processes provided you get a better estimate of the value of your house. For instance, property taxes are open to appeal, so if an assessment is not accurate can help you get a lower tax bill. 

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