Despite what you paid for your home or the upgrades you've made since you moved in, you can’t know your home's worth without considering factors like your real estate market's supply and demand, buyer preferences and the broader economy.
Whether you intend to sell your home soon, want to tap into your home's equity or are simply curious about how your home's worth may have changed over time, here are four methods for figuring out the value.
1. Check real estate sites
Popular real estate websites like Zillow(opens in a new tab), Redfin(opens in a new tab), Realtor.com(opens in a new tab) and ForSaleByOwner(opens in a new tab) use proprietary formulas for estimating home worth, but typically they include data found in public records like square footage, lot size, number of bedrooms and bathrooms, tax assessments and nearby home sales.
While these home values are based on actual data, they don’t consider the condition of your home, features you may have added or other unique benefits that local buyers might find valuable. In fact, Zillow discloses that estimates have a median error rate of 4.5%, and the error rate varies by individual market. Provided that you view these estimates as a potential range rather than a concrete figure, these websites make it free and easy to get an idea of your home's possible value.
2. Calculate likely appreciation
Though not based on your specific home, the Federal Housing Finance Agency HPI calculator(opens in a new tab) provides a home worth based on how much it may have appreciated since you purchased it. Simply enter the quarter and year that you purchased your home and what you paid for it to see what it could be worth today, based on millions of conforming home mortgages.
Like real estate websites, the estimate does not factor in upgrades or renovations you may have made—or inflation—but it's yet another data point you can use when estimating home worth.
3. Consult a real estate agent
If you're considering selling your property, a real estate pro can be a great help. Based on their expertise, a professional can use a combination of public data and more subjective details, like the condition of your home, its interior and exterior features and how attractive it'll be to prospective buyers in your specific market.
Identify a local real estate agent who knows your neighborhood and can market it inside and out to increase the likelihood of an accurate figure. Ethically speaking, you should sincerely intend to sell your home if you’re going to ask a real estate agent to provide an estimate of home worth.
4. Hire an appraiser
If you're past the "kicking the tires" phase and are genuinely interested in selling your home, you'll want to investigate hiring an appraiser. They're specifically trained to calculate home worth, using a combination of factors like state, region, city and specific neighborhood, land value, property boundaries, exterior and interior features, current market listing prices and inventory.
All that said, the International Society of Appraisers (ISA) recommends(opens in a new tab) asking an appraiser specific questions about their familiarity with the type of home you own and its location to ensure the appraiser has the required local knowledge to provide an accurate figure. While rates vary and may be billed hourly or as a flat rate, the ISA says to avoid any appraiser who charges a percentage based on the appraised value; it's a violation of the profession's code of ethics.
Keep it up. You're getting smarter about home buying.
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