4 Best Ways To Determine Home Value
Jamie Johnson4-minute read
March 27, 2023
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 home. Knowing this information will help you decide on an asking price.
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. This article will explain what home value is 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. Knowing the value of your home will help you determine what your asking price should be when you list it on the market.
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 desirable neighborhood with a fair amount of curb appeal and a low crime rate. 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. And if you’ve recently had the house painted or bought updated appliances, these things can raise the value as well.
- School district: Living in a good school district can significantly increase the value of your home. A study done by the National Association of REALTORS® found that 25% of home buyers consider the quality of nearby schools before purchasing a 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, then you‘ll be able to demand a higher price for your home. Things like high interest rates may 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 your home’s value. Let’s look at four strategies you can use to determine your home’s current value accurately.
1. Use Online Home Valuation Tools
One of the easiest ways to determine the value of your home is by using an online home valuation tool. Many companies, including Rocket Homes®, typically offer these tools and rely on recent sales in your area to determine your home’s value.
The benefit of using an online 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 only 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 hiring a professional appraiser. 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.
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 using an online valuation tool.
3. Consult A REALTOR®
Another good option is to have a REALTOR® help you determine the value of your home. REALTORS® will look at the current housing market and use 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. Plus, they can make recommendations for how you can improve the aesthetic appeal 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. And it may help you identify specific features in your home that home buyers are looking for. However, this strategy is less reliable than consulting a REALTOR® or hiring an appraiser.
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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, will help your home sell much faster.
You can determine home value by using an online valuation tool, hiring an appraiser, using a real estate agent, or checking comparable homes 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 using a REALTOR® or appraiser.
If you’re looking for ways to increase your home value, be sure to check out our guide for more recommendations. Or if you’re looking to refinance your home, you can get started today with Rocket Mortgage®.
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What Is Fair Market Value (FMV) In Real Estate And How Is It Calculated?
Mortgage Basics - 4-minute read
Lauren Bowling - March 27, 2023
Fair market value (FMV) in real estate is an assessment of a property's worth in an open market. Learn how FMV is calculated and what it's used for.