How Much Is My House Worth? – Forbes Advisor - Forbes

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Determining how much your house is worth depends on a number of factors, and can fluctuate, up or down, throughout the years. Some of those factors are in your control, like if you made home improvements to boost the value of your house. Others, like the current economy and local housing market trends, are less in your control.

Knowing the value of your home is critical when deciding if it’s a good time to sell, and negotiating a sale. But even if you’re not interested in selling, it’s important to know how much your home is worth because it impacts your ability to get financing, such as a refinance mortgage or a home equity line of credit (HELOC). It will also help you to calculate (or dispute) your property taxes when it’s time to pay your taxes.

Here is a guide to help you establish a baseline for what your house is worth.

How to Find Your Home’s Value

There are a variety of ways to get the information you need, depending on how much time and effort you are willing to put in, as well as cost if you seek professional help.

Start With Some Online Research

If you have the time and prefer researching things yourself, scouring the internet can provide a cheap and fairly quick way to determine how much your house is worth. This approach will not yield a completely accurate number, but should give you a ballpark figure to guide your decisions.

Make sure you compare like-for-like properties. The parameters for your research should include:

Your ZIP code
Size (square footage) of your property
Number of bedrooms and bathrooms
Age of the property
Condition
Outdoor space
Amenities

Some helpful sites should include:

Local home sales listings. Real estate brokerage websites are a great resource to check the recent sales price of similar properties in your neighborhood. If you own a condo, the price of condos recently sold in your building should be the most accurate guide, followed by condos in your vicinity with similar specifications. This will give you a sense of local housing market conditions, and whether homes are selling above or below value.
Online estimate tools. Many real estate brokers offer free online calculators to estimate the value of your home. But keep in mind, these are solely estimates. There are a lot of factors that will go into determining your property’s value, not all of which are accounted for by these algorithms.
House Price Index calculator. The Federal Housing Finance Agency’s Housing Price Index Calculator leverages data on real estate transactions over time to estimate the likely value of a property based on the state, metropolitan statistical area, when it was purchased and the original sales price. It provides a general sense of how much your house has appreciated over the years, but may not be entirely accurate to your house.

Have a Realtor Conduct a Comparative Market Analysis

If your ultimate goal is to sell your property, a Realtor can help determine the value of your home and an accurate sales price. The comparative market analysis (CMA) provides you with an estimate of your home’s value based on the Realtor’s assessment of the residence and housing market trends in your area, including recent purchase prices for comparable homes.

The advantage to having a Realtor do this rather than yourself is because the Realtor:

Has professional expertise to provide a more precise evaluation
Has stronger knowledge of the local housing market (sometimes they see listings or sales before being posted online)
Is typically willing to prepare a CMA for free in order to land your business

Hire A Professional Appraiser

This is probably the most accurate, and sometimes expensive option. You can hire a professional appraiser to provide an evaluation of the property’s value, which in turn should help you price your home accurately. The appraisal report also can be used to identify home improvements and repairs that will increase its value, which is helpful if you do want to sell eventually.

Fees for an appraisal usually range between $300 to $500, but remember to do your due diligence when hiring an appraiser. An inaccurate appraisal could mean making important financial decisions concerning your home’s future using bad information.

Lenders and Realtors often work with property appraisers and might have a list of recommendations to help you in your search.

What if My Home Value Increases?

So you’ve done your research or had a professional give you an accurate value of your home, and you’ve discovered your home value has increased. First off, congratulations! There are also a few ways to tap that windfall, if interested:

Sell your home. You should consider selling if it is a seller’s market and you’d likely get a hefty payout, which can either help you get out of steep mortgage payments or upgrade to a bigger home. It’s wise to consult with a licensed real estate agent about this.
Get rid of mortgage insurance. If you made a down payment of less than 20% on your property, then it’s highly likely you are paying Private mortgage insurance (PMI) as part of your monthly loan payments. If your home has increased in value, you may have enough equity to get your PMI cancelled, but this will require an appraisal report as proof to your lender.
Borrow the equity. You can borrow money based on your home’s value and use your house as the collateral on the loan if you’d like to take out a HELOC or a cash-out refinance. If you’re looking to upgrade your home, which will help increase the value further, credit lines like a HELOC are a great way to get the needed cash faster.

What if My Home Value Goes Down?

Just like there are numerous external factors driving home values up, the same goes for when your home’s value declines. It could be because there are too many similar homes for sale with far less demand, creating a buyer’s market. Poor economic conditions, rising crime rates or nearby foreclosures also could drive down your home’s value.

Your property’s value also could be lower if it::

Is old and outdated
Is in need of major repair
Lacks the the amenities popular with most buyers

How to Increase My Home Value

If you want to proactively boost the value of your home, take the time to understand the latest preferences for home buyers, and specifically what buyers in your area are attracted to. For example:

Adding an extra bedroom, bathroom, patio or a finished basement.
Giving the exterior a facelift such as replacing doors, windows, fences or painting walls.
Updating your appliances in the kitchen, bathrooms or your AC unit.
Making your home more energy efficient to reduce utility bills.

It is always important to remember that these are not universal suggestions and do not guarantee specific outcomes. Decisions are better taken in consultation with a real estate professional, while factoring in your unique situation like your budget and local housing market conditions.

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