Whenever we think of selling or buying something of value, like a car or a piece of furniture, we do our best to estimate the right price for it. Getting the price right helps you make the right decision and make the most of your investment. The same is true for your house. People aware of their home value can control property taxes, insurance premiums, and home refinancing better than those who don't. And calculating your home value is easier than you think!
Why is a Home Value Estimator Important?
A home value estimator is an online tool that helps you get a free estimate of house value for your home or a home you are interested in buying. Usually, real estate firms offer such free estimates based on the information present in their database. You can get the estimate based on your address or postal code; some home value estimators even show you the increase in your home's value if you renovate.
Critical Factors that Influence a House's Value
- Values of similar homes in your neighborhood that were recently bought or sold.
- Home size and available space for use.
- Year of construction and present condition
- Any upgrades or updates done
- Conditions in the local market
- Economic indicators
- Interest rates
5 Ways to Determine the Accurate Value of Your House
- Start with Online Valuation Tools
Most real estate websites offer a free online valuation tool that can help you estimate the market price of your home. These tools use details such as public records of property transfers, deeds of ownership and tax assessments, and statistics from recent sales and listing prices, coupled with some mathematical modelling for house valuation. Professional-grade valuation tools also give a confidence score that shows how reliable the given value is. For example, if the predicted value of your home has a confidence score of 90%, then it means the estimate is within 10% of market value. These are the best Home Estimate Sites of 2021 –
- Compare With a Recently Sold Property
Comparing your home to a recently sold property in your area is a popular home valuation strategy in the real estate industry. Some essential features for estimating the value of a house are –
- External conditions and facilities
- Internal features such as floors, rooms, construction quality, etc.
- Age of the property
- Number of homes on sale in that area vs. number of potential buyers in the area
Once you have all the above details about your home, compare it with other homes with similar characteristics. You may find a few other buildings with similar buildings and sizes in your area. Determine an average price to see where your house stands vis-à-vis the average.
- Identify Trends with the FHFA House Price Index Calculator
The Federal Housing Financing Agency or FHFA offers a house price index calculator that uses a scientific approach to provide an estimated market value of your home. The FHFA database has large amounts of historical mortgage data; the calculator uses this data to track the changing value of your house over the past few decades, from one sale to the next. Even though this approach can help you define your neighborhood's affordability, it does not estimate the value of any one house in particular.
- Work with a Realtor or Real Estate Agent
Realtors are experts at home value estimation and have several professional techniques to determine your home value. Instead of relying on an online valuation tool, getting a second opinion from an experienced realtor is best. Realtors use a technique known as Comparative Market Analysis (CMA). The CMA is a report that is prepared by real estate agents using industry data. It compares your home to other similar properties in your neighborhood currently on sale or has recently been sold.
- Hire a Professional Appraiser
More than one-fourth of the homeowners in the USA (28%) hire appraisers to estimate the value of their homes. (REF) Appraisers can also help you know the value of your property on a past date or the current market value. They consider the market conditions, property characteristics, and comparable properties to determine the value of your home.
Apart from the above methods, you can also go through the records available with –
- Local assessors' office
- Online databases
- Local newspapers
Knowing the accurate value of your home or property gives you control over the sales process. It helps you determine what you can afford and judge if a listing is priced appropriately or not. This information is also essential for refinancing, insurance premiums, and annual property taxes. If you are a homeowner, go ahead and determine the value of your home to take control of your property finances. Get the estimate now!