How much is my house worth?

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While 2020 was a troubling year on many fronts, there was a silver lining for homeowners: Real estate prices rose considerably. You might be wondering if you should take advantage of the climb in values and sell your home or tap its newfound equity. As you consider your options, a good starting point is to ask yourself: exactly how much is my house worth?

How much is my house worth?

When getting a home value estimate, you should consider two main types of valuation:

  • Fair market value: Fair market value encompasses what your home looks like to prospective buyers looking at other homes in the area. Consider the sale price of a home that’s similar to yours (same number of bedrooms and bathrooms, square footage or outdoor space, say). If you work with a real estate agent to help you sell your home, this is where your agent will start: by looking at comps to gauge what buyers are willing to pay for a property comparable to yours.
  • Appraised value: While the appraised value of your home factors in comps, it differs from fair market value. To calculate appraised value, a licensed appraiser considers the location, size and condition of your home, and any renovations you’ve completed. The appraised value is what mortgage lenders look at when a borrower buys a home or refinances their mortgage.

5 ways to find out what your house is worth

1. Enter your address into a home value estimator

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

There are loads of online tools that offer a quick home value estimate. These online tools — sometimes called automated valuation models, or AVMs — use algorithms and publicly available data, such as recent sales, tax assessments and other public records, to generate an estimate. There are many home value estimators out there, each using a different methodology, so your estimate can vary. Common home value estimators include:

These can all be helpful in getting a sense of your home’s value, but it’s important to think of them as a starting point and not the final word. Technology can do a lot, but your home is one of your biggest assets, which means it’s worth talking to a professional about it, too.

  • Pros: The algorithms that power home value estimators have come a long way. Now used by millions, they are a simple way to get a fast home value estimate just by typing in an address.
  • Cons: Take these computer-generated home value estimates with a grain of salt. They may sometimes be based on incomplete or erroneous data, or may not take into consideration a recent high-end kitchen renovation or bathroom addition, for example.

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 do decide to sell 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 may 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 the 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 $339, according to HomeAdvisor.

My home’s value went up. What should I do?

Your home’s value can rise due to a range of factors. Right now, home prices have increased in many places due to a shortage of supply mixed with the lowest mortgage rates in history. If your home value has increased, you have a few options and considerations to make:

1. You might be able to save money by eliminating private mortgage insurance

If you’re paying private mortgage insurance (PMI) and your home’s value has gone up to the point where you now have 20 percent equity, you can ask your lender to cancel your PMI premiums.

2. You may need to adjust your homeowners insurance policy

Homeowners insurance cost and coverage are typically based on your home’s value. If it’s increased, you’ll want to make sure you’re fully protected.

“It’s important to review your property’s value with your insurance agent yearly to make sure your residence has the proper insurance coverage,” explains Kimberly Smith, owner of Garnet Property Group in Bristol, Connecticut.

3. You might be in a better position to improve your home

If your home’s value has increased, you might be in good shape to continue to drive up its value. With more equity in the property, you can take advantage of a home equity loan or cash-out refinance and invest in a renovation or remodeling project.

“Determining a home’s valuation is useful if you’re considering tapping into your home’s equity in the form of a home equity loan, home equity line of credit or cash-out refinance so that you know how much equity you’ve accrued,” Smith says.

Bottom line

Remember that no single home valuation method is guaranteed to be 100-percent accurate. That’s why using a combination of these resources can help give you a more informed perspective of what your home is worth.

For example, you might get a free CMA and conduct your own research using an online home value estimator, as well as the FHFA calculator and county auditor’s website. Additionally or alternatively, you could pay for a professional appraisal. Averaging together all the final values you gather could give you a more accurate picture of your home’s value.

Ultimately, however, the most reliable home value estimates come from professionals who take the time to carefully assess your property based on a variety of factors.

“All of the evaluation tools are useful in giving an idea of the worth of your home, but an appraiser and/or an experienced agent will be the most accurate sources for determining value,” Krasow says. “A trained professional will have an advantage, as a computer cannot determine intrinsic value or consider the condition and improvements you’ve made to your home.”

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