Wonder what your house — or a house you might buy — is really worth? Knowing how to calculate your home’s value with the help of online tools and trained professionals better prepares you to buy, sell, refinance, tap into your home’s equity or even negotiate lower property taxes.
How to Find the Value of a Home
1. Use online valuation tools
Searching “how much is my house worth?” online reveals dozens of home value estimators. In fact, 22% of U.S. homeowners who determined their home’s value used an online estimator, according to a survey. The technical term for these tools is automated valuation model, or AVM, and they’re typically offered by lenders or real estate sites like Zillow and Redfin.
Using public records like property transfers, deeds of ownership and tax assessments along with some mathematical modeling, these tools try to predict your home’s value based on recent sales and listing prices in the area.
2. Get a comparative market analysis
When you’re ready to dive deeper into your home value, you can ask a local real estate agent for a comparative market analysis, or CMA.
Though not as detailed as a professional appraisal, a CMA provides an agent’s evaluation of the home and market to provide an estimate of value, typically for listing purposes.
3. Use the FHFA House Price Index Calculator
If you’re wary of AVMs but still want a quick estimate of what your home is worth, the Federal Housing Financing Agency’s house price index (HPI) calculator applies a more scientific approach.
The tool uses the “repeat sales method,” says FHFA senior economist Will Doerner. Armed with millions of mortgage transactions gathered since the 1970s, the FHFA tracks a house’s change in value from one sale to the next. Then it uses this information to estimate how values fluctuate in a given market.
4. Hire a professional appraiser
Lenders require a home appraisal before they’ll approve a mortgage, but as a property owner, you can hire an appraiser to estimate home value at any time. More than one-fourth (28%) of U.S. homeowners determined their home’s value through an appraisal, according to the survey.
5. Evaluate comparable properties
One thing appraisals and AVMs have in common is their reliance on the recent sale value of comparable properties, often called “comps.” Well over half (56%) of U.S. homeowners estimated their home’s value by looking at comparable properties. On its face, this approach seems simplest.
Pulling comps is one way to determine market value without paying an appraiser, but use good judgment. “Just because the property next door sold doesn’t mean it’s a comp,” Lundquist says.
To choose accurate comps, you must employ an “apples to apples” approach, Lundquist says. Think about which properties would interest a buyer if yours weren’t available. Look for similar size, location, condition and upgrades.
Why Home Value is Important
Knowing your home’s value allows you to evaluate what you can afford, determine whether a listing is priced appropriately and decide how to price your own home, says Gayle Weiswasser, senior vice president of marketing and communications at Homesnap, an app that offers home value estimates.
And the benefits of finding a home’s value don’t end with a purchase or sale: Refinances, home equity lines of credit, insurance premiums and annual property taxes are all based on home value.