Determining the value of your home can be accomplished by using online valuation tools or through the help of trained professionals. Knowing how to calculate a home’s value is great preparation for buying, selling, refinancing, negotiating for lower property taxes, or tapping into your home’s equity. In addition, knowing the value of your home gives you a good idea of your overall financial health.
Here are a few ways that can help you determine your home’s value:
Online valuation tools
Automated valuation models (AVMs) or online valuation tools are easy-to-use estimators offered by lenders or online real estate resources such as Zillow or Trulia.
These tools make use of public records such as deeds of ownership, property transfers, and tax assessments combined with mathematical models to predict a property’s current value based on listing prices and recent sales in the area.
There are also professional-grade AVMs, which are typically used by real estate professionals and lenders. These tools use different methods to estimate prices, but most of them base estimates on a “confidence score” which displays how close the estimate is to the market value. A 90% confidence score for example, indicates an estimate within 10% of market value.
Request a comparative market analysis
If you’re ready to take a step further in determining your home’s value, get in touch with a local real estate agent and ask for a comparative market analysis or CMA.
Although a CMA isn’t as in-depth compared to a professional appraisal, it will give you an agent’s evaluation of the home and the local market, giving you a professional estimate of its value.
Many local real estate agents offer CMAs for little to no cost. Keep in mind however that they might expect you to hire them as a selling agent in exchange for giving you a CMA for free or for a low price.
Get a professional appraisal
For home buyers, an appraisal is required by lenders in order to get approval for a mortgage. As a property owner however, you can also hire an appraiser in order to get an estimate of your home’s value.
A professional appraiser’s job is to give clients a value on a property based on their needs. They can evaluate certain factors such as:
- A home’s features and characteristics, including renovations, upgrades, and the type of land it’s located in.
- The local real estate market in which a home is located.
- Vacancies, recent sales, listings and other factors shared by similar properties in the same market.
Using this information, an appraiser will then create a final opinion of value, which will be provided to the client in an official report.
Knowing your home’s value will not only help you price your own home, but allows you to identify listings that are not priced appropriately, and determine how much you can afford. It also gives better control over processes such as annual property taxes, refinances, insurance premiums, and home equity line of credit, as these are all based on home value.