How To Estimate Your Home’s Value

What to Consider When Choosing the Best Home Value Estimator for You

Not all home value estimators are created equal. Each site uses a different set of criteria and varying algorithms to perform a valuation. Accuracy is critical, but there are some other key factors to remember when you’re looking to answer the question of “What’s my home worth?”

Estimate Purpose

Some of the most common reasons a homeowner would use a home value estimator site is when selling or buying a home, considering a loan, or refinancing. Home value estimators can return results for homes on or off the market. Some estimators will return only a home’s valuation, while others will include more information about a home, including its acreage, square footage, and the number of rooms.

Market Value vs. Appraised Value

When using home value estimator sites, consider that these values aren’t market values. Market value is the value of a house at the time it’s placed on the market; it’s the price a buyer is willing to pay for a person’s property based on perceived value. This perceived value could be higher or lower than the market value. The values on home value estimator sites aren’t appraisal values, either. An appraiser determines the home’s appraised value based on various factors, mainly how much homes in the neighborhood have sold for recently. Home value estimator sites may consider the market and appraised values along with other values to arrive at their estimates. Still, valuations from these sites are only estimates and could change due to several variables.

Factors in Determining Home Value

So how exactly do these sites determine home value? Every site pulls information from various sources. These sources include MLS (multiple listing services), county records, and comparable homes in the area.

Another way to determine a home’s value is by seeking the assistance of a real estate agent who will prepare a comparative market analysis. This analysis is based on other properties recently sold in the area. Still another way to determine home value is by soliciting the help of a certified appraiser. An appraiser will do a much more hands-on home valuation for a fee. The cost of an appraisal may typically be $300 to $400. However, for much larger properties, it can cost over $1,000. Because home value estimator sites are free, they can be a beneficial first step before paying for an appraiser’s services.

Accuracy and Median Error Rate

Accuracy is often an issue when using these value estimator sites. Depending on whether the property is on or off the market, some sites may be off by as much as 1 to 10 percent. Homes that are on the market or were recently sold and those with updated public information will have more accurate estimates. Unfortunately, recent changes, such as renovations to the home, may not be calculated into the valuation. If you’ve done a major remodeling job, like adding a bedroom or bathroom, but haven’t updated the public records, it won’t factor into the valuation either. These discrepancies could yield misleading results when a user plugs in their address. In some cases, it’s a good idea to use a remodeling estimator in addition to a home value estimator to determine the value of a home.

Update Frequency

When using a home value estimator, keep in mind when the site updates information. The value of a property may increase over time, especially if there have been recent renovations or significant changes within the neighborhood. Also, a home could be losing value due to its being outdated, poor curb appeal, or low property tax valuation. High-traffic, reputable services that pull from robust listing sites will typically update more regularly; these sites may display the last update time. Depending on its algorithms, a home value estimator site may update daily, weekly, monthly, or at other intervals.

Privacy

Some house details are public information, so a user can plug in any address and determine information about a property. The results may yield the value of the home and a few other essential details about the property. However, if users want to get very detailed information on a particular property, this information generally isn’t available to the public. A site will allow access to this information if a user claims a property by setting up an account. The user can log in and edit the available data with an active account to provide much more accurate results with an active account.

Additional Tools

In addition to a home value estimator, some sites may provide additional tools for the user. For example, some sites allow users to search for or list a home for sale. Some may also offer a glossary of mortgage terms, educational resources, and credit cards. Not only do these sites provide tools for people who want to sell or refinance their homes, but if a homeowner prefers to become a landlord and rent their property, some sites also provide tools to help advertise or manage the property. Depending on which home value estimator a user chooses, there could be various other products that the site wants the user to consider.

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What to do before the appraiser arrives

Let’s be honest, a clean house will make a better first impression on anyone — and that includes an appraiser.

“When I drive up, I can tell right away if someone takes care of their house or not,” says Gargano. “It’s just that feeling that you get.” If you want to make sure your home appraises for top dollar, take the time to prep for the appraiser’s arrival and do any of all of the following:

  • Clear away clutter
  • Tidy up the house inside and out
  • Make sure your property is accessible
  • Put together a home fact sheet with your agent
  • Make minor repairs
  • Secure any pets
  • Plan to be away yourself, or be patient and don’t rush the appraiser

Cost of Using One of the Best Home Value Estimator Sites

One of the best things about home value estimator sites is that most don’t charge a fee to determine a home’s value. The user only needs to go to the site, plug in their address, and continue to the results. Homeowners can make preliminary decisions without paying a professional, such as an appraiser, hundreds of dollars for a home valuation—at least not initially. For instance, if a home value estimator reveals that a home’s value is substantially lower than the homeowner thought, the user may conclude that now isn’t a good time to sell or refinance—and they didn’t have to invest any money to come to this conclusion.

What factors affect home value?

A number of factors can affect the value of your home, including:

  • The neighborhood
  • Its age
  • Its condition
  • Its size
  • Any home improvements or upgrades

There are other factors that impact property values overall, too. These include the local housing market, economy, interest rates and tax rates, Reed says.

Fine tune your estimate with a comparative market analysis

Before you first meet, your agent will prepare a comparative market analysis (CMA). When putting together this report, the agent evaluates nearby recently sold properties (aka “comps”) that are similar to your own house in size, age, and characteristics to determine your home’s value. It’s the closest thing you can do to mimic the home appraisal process without being a professional licensed appraiser.

It’s also helpful to have them walk through your home and tweak their estimate after they’ve seen it first hand. “All floor plans aren’t equal,” said Julie Kaczor, a top-selling agent in Naperville, Illinois. “Two and a half bathrooms could mean that there is only one bathroom upstairs for four bedrooms. The truth is the floor plan and the function of the home is a very big part of an appraisal, and there is an adjustment for that.”

Once they’ve pulled comps and seen your home, the agent could adjust your CMA. It will tell you:

  • How your home stacks up against recently sold homes in your area – the number of bedrooms and bathrooms, square footage, garage or other amenities
  • What homes in your area have sold for recently – with adjustments for differences in size and other features
  • If sold homes had updates or other factors that indicated they might be worth more or less than your home
  • How quickly homes have been selling in your area
  • If homes are selling for above or below list price

The CMA won’t just help you set your home’s list price, it’ll give you a rough idea of how the home sale process might go — everything from potential interest in your home to how quickly it could sell.

What Home Sellers Need to Know About Appraisals

As a seller, a low appraisal, if accurate, means you may have to lower your home’s price to get it sold. Holding out for an all-cash buyer who doesn't require an appraisal as a condition of completing the transaction is unlikely to net you a higher sales price. No one wants to overpay for a home.

Unfortunately, if your surrounding area has experienced recent distressed sales, that can lower your home’s appraisal value. If you feel that your home’s value has been dragged down by the sale price of nearby foreclosures and short sales, you may be able to convince the appraiser that your home is worth more if it’s in significantly better condition than those properties.

Getting an appraisal is also a required step when giving a home to a family member as a gift of equity.

How To Find Comparable Sales Without An Agent

comparable salesWhile consumers don’t have direct access to the MLS to find comparable sales, there are still easy ways to get this information. You can even use the search tool on this website to locate past sales. Just look for the property status field on our search page and select the box next to “Sold”.

You’ll have the option to view listings that sold up to six months prior, which is about the same max timeframe appraisers use when they look for comparable sales. If you want to go back further, just select “All”. Please note, only the primary listing photo is available for sold listings, so you’ll need to use another source if you want to see additional property images.  

If you’re looking for more in-depth property information and historical photos, try using sites like Realtor.com, Zillow, or even your county tax commissioner’s website. By searching county records, you’ll be able to view information for all properties, whether they were listed on the MLS or not. Most counties now have records online, but they can sometimes take a couple weeks or more before transactions are recorded. Therefore, the most recent sales may not be available.

What Makes A Good Comparable Property?

Finding the right comparable properties (comps) is the key to accurately determining your home’s true market value. Finding good comparable sales is ultimately about identifying the properties that most closely match your home. The best comps are the those of the same style and size that have most recently sold in your immediate area. Look for houses in the same elementary school district; the closer they are the better.

Try and find houses that were built within 10 years of your home and have a similar: style, size, number of beds/baths, construction materials and lot size. You should also factor in amenities and upgrades that have been done, as these can add considerable value to a home. When evaluating recent comparable sales, you should consider the date of closing (the more recent the better), seller contributions toward the buyer’s closing costs, and whether the buyer paid cash or financed the purchase.

Just How Accurate Are Automated Valuations?

Despite their huge database of properties and realPlain and simple… not very accurate. Don’t believe me? Check out Zillow’s own data showing the accuracy of their popular Zestimate home value tool; they publish it on their website.

Despite their huge database of properties and real estate data, they still don’t have a 100% accurate home value estimator. But think about it. How could a computer algorithm factor in all the variables previously discussed that contribute to the value of real estate?

Some things just require the knowledge and evaluation of a trained professional (a human one) to properly calculate. Most online home valuation tools simply rely on local sales trends and public real estate records to estimate general price trends. Unfortunately, too many people rely heavily on these online home value estimators; a decision that can prove to be very costly.

However, finding out an approximate price range for your property can help you estimate how much equity you’ve built (sale price minus mortgage loan(s) balance); just remember, it won’t be exact. Maybe in the future, robots will come to each house to measure and evaluate the property like a trained professional would, but until then, stick with a house worth estimator that is human.

Why Verifying Public Data Is Important

With more and more buyers and sellers turning to the internet to search and research real estate sales on their own, it’s more important than ever to verify your property’s information is correct. Public data, like real estate tax records, can often be wrong. This data may be used by hundreds of websites, including real estate home value estimator tools on sites like Zillow. Public real estate records are also used by banks, appraisers, agents, investors, utility companies and more, so you’ll want to make sure they’re correct. 

Here’s what can happen to the estimated market value of a home when public data is incorrect. Let’s say public records have your square footage off by just 100 sq/ft. Many property worth estimator tools utilize the average price per square foot of houses in the surrounding area to help calculate a value for your home. With houses in Atlanta selling at $100+ per square foot, that means your home’s estimated value could be off by ten thousand dollars, or more! So take the time to review and verify all public data for your property, especially before listing your home for sale.

5 ways to find out what your house is worth

2. Ask a real estate agent for a free comparative market analysis

  • Best for: Those who are selling or considering selling a home

Real estate agents typically offer a comparative market analysis (CMA) for free in hopes of winning your business if you’re selling your house. To complete the CMA, the agent pulls data about recent sales of comps in the area. They then draw on their knowledge of the neighborhood and any special characteristics of your property to estimate its value. A buyer’s agent may also provide this same service for any home you want to make an offer on.

“A good agent will have the tools necessary to drill down and find an accurate market value,” says Robert Krasow, a Realtor with Michael Saunders & Company in Sarasota, Florida. “An experienced professional follows the market, looks at home conditions and knows the neighborhood — all while making determinations using both data and their expertise.”

  • Pros: It’s a plus to have an expert identify comps, answer questions and give guidance.
  • Cons: Real estate agents may use different comps or have conflicting opinions of your home’s value. In addition, if there haven’t been many sales in the neighborhood or the comps are not that similar to your property, the estimate won’t be as accurate.

3. Check your county or municipal auditor’s website

  • Best for: Those who want to understand their home’s value from a tax perspective

County auditors periodically assess the value of residential properties for property tax purposes, and this information is searchable online. You can look up the assessed value of your house to see if it has appreciated, or compare the figures with other homes for sale.

  • Pros: This objective data is easily accessible and provides another point of comparison.
  • Cons: This estimate is for the taxable value of your home and may not reflect some of the market factors that affect the sales price, such as time of year, competitiveness or curb appeal. In some localities, assessed values may be far off from market values, and it can take some research to find them.

4. Identify trends with the FHFA House Price Index calculator

  • Best for: Those who want to understand property price trends in their area over the time they’ve owned their home or another period

The Federal Housing Finance Agency’s House Price Index (HPI) calculator offers yet another take on home value. The tool analyzes historical mortgage data to project what homes in your state or metropolitan area are likely to be worth based on the rate of appreciation of all homes in the area over a given period.

  • Pros: The calculator draws on data from tens of millions of home sales and offers insights about broad house price fluctuations, so homeowners can compare the relative affordability of neighborhoods over a period of time.
  • Cons: This calculator doesn’t estimate the market value of a particular house. Instead, it offers a look at home price appreciation or depreciation over time. While this will give you a general idea of the local market, it won’t drill down into the specifics of your property.

5. Hire a professional appraiser

  • Best for: Those who want the most professional home value estimate, and may want to use the data as they consult with a mortgage lender

Mortgage lenders hire appraisers to confirm the value of a house before approving a loan. Some home sellers choose to take the extra step of hiring an appraiser, but it’s not required. The appraiser considers the characteristics of the property, such as how many bedrooms and bathrooms it has, as well as comps, similar to a CMA prepared by a real estate agent.

  • Pros: Professional appraisers are typically licensed or certified by the state they work in and can provide an objective opinion of the value of a home.
  • Cons: If you’re seeking a mortgage, you’ll have to pay for the appraisal the lender orders. An appraisal costs an average of about $340, but can be anywhere from roughly $300 to $420, according to HomeAdvisor.

The Bottom Line

When everything goes smoothly, the home appraisal is just another box to check on a closing checklist. When the appraisal value is lower than expected, the transaction can be delayed or even canceled. Regardless of which situation you encounter in your home buying, selling, or refinancing experience, a basic understanding of how the appraisal process functions can only work in your favor, especially if you’re buying your first home.

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