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4 Best Ways To Determine Home Value

April 12, 2024 5-minute read

Author: Jamie Johnson


If you’re looking to sell your home in the next year, you need to know your current home value. The home value is what interested buyers are willing to pay for your house. Knowing this information will help you decide on an asking price for your home sale.

If you don’t know the current value of your home, you’re not alone. Many borrowers don’t understand what home value is or how to calculate it. Below, we’ll explore what home value means when selling your property and how to determine it for yourself.

What Does Home Value Mean?

Your home value is the price another buyer is willing to pay to purchase your home. This is also sometimes referred to as a home’s current market value. Understanding the value of your home will help you determine what your asking price should be when you list it on the market.

Factors That Affect Home Value

There are a variety of factors that determine the value of your home, including:

  • The location: The value will be higher if your home is located in a neighborhood with a fair amount of curb appeal. Access to nearby highways, shopping centers and restaurants can also raise its value.

  • The size and condition: The size and layout of your home will also affect its market value. If you’ve recently had the house painted or bought updated appliances, these upgrades can raise your home’s value as well.

  • School district: Living in a good school district can significantly increase the value of your home.

  • Comparable homes: Home buyers may look at houses similar to yours to see what they sold for in the last several months.

  • Current market conditions: The current market conditions will also affect the value of your home. For instance, if there are more buyers than there are houses on the market, you’ll be able to push for a higher sale price for your house. Factors like high mortgage interest rates may also prevent some people from buying a home.

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How Can I Determine The Value Of My Home?

Before you can buy, sell or refinance, you need to know the estimated value of your home. Let’s look at four strategies you can use to accurately determine your home’s current value.

1. Use Online Home Valuation Tools

One of the easiest ways to estimate the value of your home is by using an online home valuation tool. Many companies, including Rocket HomesSM, typically offer these tools and rely on recent sales in your area to determine your home’s value.

The benefit of using a home value estimator is that you’ll receive an immediate estimate. However, different sites will use different metrics to evaluate your home, and some are more reliable than others. So, if you choose to go this route, it’s essential to use trustworthy sites.

2. Hire A Professional Appraiser

One of the most accurate ways to figure out the value of your home is by getting a home appraisal by a professional. Lenders will rely on a third-party home appraiser before approving a mortgage, but it’s not a requirement for homeowners. However, using an appraiser is a good idea if you’re preparing to sell your home.

During the appointment, an appraiser looks at many factors to determine the home value estimate. They’ll look at the current condition of your home, your neighborhood, the market conditions and comparably priced houses to assess your home’s value. For this reason, it’s much more accurate than just getting an online home value estimate.

3. Consult A REALTOR®

Another good option is to have a real estate agent or REALTOR® help you determine the value of your home. REALTORS® will look at the current housing market and use a comparative market analysis to assess your home’s valuation. Plus, real estate professionals can access credit monitoring analysis (CMA) data.

Having a REALTOR® assess your home’s value is less detailed than what you’d receive with a professional appraiser, but it’s still a good option. Real estate agents can make recommendations, like ways to improve the aesthetic appeal of your house, in order to increase the value of your home.

4. Pull ‘Comps’ On Similar Properties

Real estate comps are comparable homes in the area where you’re looking to sell. If you check online sites, you can find information on nearby properties that sold recently. Not only will you see the price listed, but you’ll see how those homes compare to yours.

The advantage of using this strategy is that it’s free and easy and can help you determine what to list your home for. It can also help you identify specific features in your house that home buyers are looking for. However, this strategy is less reliable than consulting a real estate professional or hiring an appraiser.

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Why Is It Important To Know My Home’s Value?

Understanding your home’s value is important for a few different reasons. Below are some of the more common situations where it’s crucial to know the value of your home:

  • Selling your house: Knowing how much your home is worth can help you determine the best price to list it for on the housing market. Your home’s value can also assist in deciding between different home offers and, ultimately, on a final sale price.

  • Taking out a HELOC: You’ll need to know your home’s value when taking out a home equity line of credit (HELOC) because you’re borrowing against the equity in your home. Your home value can be used in calculating your estimated line of credit for a HELOC, where you multiply your home value by your loan-to-value ratio (LTV) to get the maximum amount of borrowable equity.

  • Refinancing your home loan: Your home value can also be a valuable indicator when refinancing your mortgage. If you’re opting for a cash-out refinance, for instance, your home value determines how much money you can take out.

  • Assessing your property taxes: The amount you pay in property taxes is determined by the assessed value of your house and is performed by a professional assessor. Understanding the tax-assessed value of your property can help you appeal your property taxes if you believe they’re too high.

The Bottom Line: Keep Track Of Your Home Value

Before you can sell your home, you need to know what it’s worth. Knowing your home’s value will help you determine an accurate listing price and, hopefully, help your home sell much faster.

You can determine home value by using a home value estimator, hiring an appraiser, working with a real estate agent or checking real estate comps in your area. Using an online valuation tool or pulling comps in your neighborhood is easy and quick, but you’ll receive more accurate results hiring a real estate professional or an appraiser.

Are you looking to increase your home value before selling the property? Consider a cash-out refinance to fund any necessary home renovations. Start your application today with Rocket Mortgage®.

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Jamie Johnson

Jamie Johnson is a Kansas City-based freelance writer who writes about a variety of personal finance topics, including loans, building credit, and paying down debt. She currently writes for clients like the U.S. Chamber of Commerce, Business Insider, and Bankrate.