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Homebuyers and sellers may be on opposite sides of the transaction, but they have one dilemma in common: They both need to sort through a thicket of data and valuation estimates to determine how much the home is really worth.

Ultimately, a home’s value is based on what a buyer is willing to pay and what a seller is willing to accept. When a buyer and seller agree on a price, therefore, that amount reflects the home’s current market value. But there’s no straightforward formula for determining that value.

The bottom line: Prices and valuations will differ, sometimes dramatically. The only way homebuyers and sellers can decide which number best represents the home’s true market value is to dig deeper into the data and try to understand the comps (or recent sales of similar homes) and the different ways to calculate a number.

The best thing for a homeowner to do is gather home price estimates from a variety of sources. Arm yourself with as much information as possible about the neighborhood and the house, especially its characteristics, history and condition. That way you’ll be better able to make your case when it comes time to negotiate a sale price for the home. Fortunately, there are many options for obtaining home price estimates for both buyers and sellers, many of which don’t cost a cent.

How to obtain home price valuations

Check online real estate valuation tools

Dozens of online home price estimators are available on real estate and lender websites. Zillow’s Zestimate and Redfin’s Estimate are two popular ones. The online tools use algorithms and publicly available data, such as recent sales, tax assessments and other public records to generate an estimate.

Pros: The algorithms that power online house valuation tools have come a long way. Used by millions of consumers, they are a simple way to get a fast price estimate, or a ballpark number, just by typing in an address.

Cons: Take these computer-generated home price estimates with a grain of salt, though. They may sometimes be based on incomplete or erroneous data. They may not take into consideration, for example, a recent high-end kitchen renovation or family room addition. Think of online valuation tools as a starting point, not the final word on how much a house is worth. Check a few different sites and then, when you’re ready, discuss with a local real estate agent.

Best for: Sellers, buyers or anyone curious about the ballpark value of a home.

Ask a local real estate agent for a free comparative market analysis

Real estate agents typically offer a comparative market analysis, or CMA, for free in hopes of winning your business if you do decide to sell your house. The agents pull data about recent sales of comparable houses, or “comps,” in the area. They then draw on their knowledge of the neighborhood and any special characteristics of your property to estimate value. A buyer’s agent will also provide this same service for any home you may want to bid on.

Pros: It’s a plus to have an expert identify comps, answer questions and give guidance. “The best method for determining a home’s value is by sitting down with a local Realtor. A Realtor will know your neighborhood, and will do a CMA so you can see what similar homes in your neighborhood have sold for,” says Grant Lopez, chairman of the San Antonio Board of Realtors.

Cons: Real estate agents may use different comps or have conflicting opinions of your home’s value. 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.

Best for: Owners who are selling, or considering selling, a home.

Check your county or municipal auditor’s website

County auditors periodically assess the value of residential properties for tax purposes, and this information is searchable online. Homeowners may want to look up the assessed value of their houses to see whether they have appreciated, or to compare the figures with other houses that are for sale.

“This may not be an exact indication of value for what homes are worth in your area, but it could be a good estimation based on what the county thinks your home is worth,” says Lopez.

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 sale price, such as time of year, competitiveness or curb appeal. In some localities, assessed values may be far off from market values.

Best for: Homeowners who want to understand their property value from a tax perspective.

FHFA House Price Index Calculator

The Federal Housing Finance Agency’s house price index (HPI) calculator offers yet another take on house 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 that you specify.

Pros: The calculator draws on data from tens of millions of home sales and offers insights about broad house price fluctuations. Homeowners can compare the relative affordability of neighborhoods over a period of time.

Cons: To be clear, the FHFA House Price Index Calculator doesn’t estimate the market value of a particular house. Instead, it offers a look at home price appreciation or depreciation over a period of time.

Best for: Homeowners who want to understand property price trends in their area over the time they’ve owned the house or another period of time.

Hire a professional appraiser

Mortgage lenders hire professional 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, as well as comps, similar to a comparative market analysis prepared by a real estate agent.

“Appraisers will value the property based on real estate transaction data and objective characteristics of the home,” says Julienne Joseph, assistant director of government housing programs for the Mortgage Bankers Association.

Pros: Professional appraisers are typically licensed or certified by the state and can provide an objective opinion of the value of the home. However, many home sellers may choose to skip a professional appraisal, knowing that the mortgage lender will order its own appraisal.

Cons: A professional appraisal may be an unnecessary expense. “You don’t need to spend money to figure out your home’s value. There is no cost to sitting down with a Realtor to discuss your home’s value,” says Lopez.

Best for: Homeowners who want an additional objective price estimate and don’t mind the cost.

So what is the home’s value?

Whether a buyer should bid higher or lower than the seller’s asking price depends on local market conditions and the desirability of the home compared with similar nearby homes that are also for sale.

Market value can also differ slightly or significantly from online valuations calculated by such websites as Zillow or Trulia.

Whether online valuations, which are based on public-records data, are on the money depends in part on the strength of the algorithm, accuracy of the data and condition of the home, plus myriad other factors. If the home is outdated or in need of major repairs, an online valuation may be significantly higher than the market value.

Keep in mind too that an online tool won’t know if traffic in the neighborhood is snarled at rush hour or there’s high-voltage power lines nearby, or many other factors that affect home values. And algorithms can’t smell pet odors in the carpets or calculate the hours it will take to remove layers of hideous wallpaper. That’s why visiting the home and neighborhood is key in arriving at a bid price for a home.

The bottom line is that prices and valuations will differ, sometimes dramatically, and the only way homebuyers and sellers can decide which number best represents the home’s market value is to dig deeper into the data and try to understand the comps and calculations.

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