Interested in buying or selling a house? Regardless of which side of the transaction you’re on, you’ll need to know some property value basics.
How To Find The Value of a Home
Property value refers to a property’s monetary value at any given time based on what the current market will support. Property value will fluctuate based on two key forces: supply and demand. However, there are a wide variety of factors that can dictate supply and demand.
Determining the property value of a home can help you make the most educated decisions when buying or selling a home. Here are some simple steps to figure it out:
Make Use of an Online Home Value Estimator
Need help figuring out a home’s value? There’s an app for that … Or at least, plenty of free programs. A quick online search will reveal dozens of free home value estimator calculators, so take your pick.
These programs use algorithms based on public records data including ownership deeds, property transfers, recent sales, and tax assessments to predict a home’s value.
Keep in mind — it’s not an exact science. These free calculators can be a good starting point, but the results can be skewed, especially if data is limited. Talking to a local real estate professional or combining this research with some of the other methods discussed here will generally give you a more accurate read on the current value of a property.
Do Some Research on the Current Housing Market
As previously noted, there are a variety of factors that will play into determining property value. These various factors are in a state of fluctuation at any given time, so it’s a smart idea to do some research into what the housing market is like right now.
Ideally, you should approach the housing market on both a macro- and micro-level. The macro-level refers to the overall market. The micro-level refers to the specific area where you’re looking to buy or sell.
For example, even in a downtrending market there may be certain cities or areas that are deemed more desirable that buck the trend. The opposite can also be true — just because a market is uptrending doesn’t mean property values everywhere are on the rise.
Here are some things to look for both locally and nationally:
- Is it a buyer’s or seller’s market?
- What’s the economy and job market like?
- What are the ROI metrics of the specific area you’re looking at?
Consult a Real Estate Agent For a Comparative Market Analysis
Some jobs are best left to the pros … Like a comparative market analysis (CMA for short), for instance.
Seeking out a CMA is a step you should consider taking once you start to get more serious about buying or selling.
It’s not as thorough as a professional appraisal, but it carries more weight than an online property valuation calculator. With the CMA, a real estate agent performs an evaluation of the home and market in question to provide an estimate of potential value.
Often, real estate agents will provide such a service at no cost. But be aware that they’re likely doing it in hopes that you’ll hire them, so they may follow up persistently with you afterward.
Hire an Appraiser
Eventually, a home appraisal will be required before a lender signs off on a mortgage. But if you’re a homeowner, you can actually hire an appraiser to give you an estimate for your home at any time.
Appraisers will look at a variety of things, including:
- The market in your area: They’ll take a look at the region, your specific town, and the specific neighborhood of the home.
- Physical property: They’ll consider the house itself, including the land, the shape of the house, and improvements.
- Comparables: They’ll look at comparable homes in the area to determine things like cost, depreciation, and other factors that could play into property value.
They’ll deliver all of their analysis in the form of a detailed, official report.
Look at Comparable Homes Online
Not ready to hire an appraiser quite let? Taking a look at similar homes online can give you a better idea of property values in a particular area. Of course, there’s a caveat: no two properties are exactly the same, and you’re probably not equipped with the knowledge to analyze the listings in the same way a professional would.
However, in looking at comparables you can get a good idea of the values of homes in the area in question. Look for as many similarities as you can — the same number of bedrooms and baths, square footage, etc.
For the best view of comparables, try to find more than one. Three or more is ideal so you can capture a better average.
Why Should You Know a Home’s Value?
Understanding the value of a home has many advantages:
- It gives you a better idea of what your home could sell for — or what you can afford
- It can help you determine if a listing price is fair
- It can assist when you’re looking into refinancing or taking out a line of credit
Determining property value might not be the most exciting part of the home buying or selling process, but it’s nonetheless an important step.
Since every home is unique, it’s important to do your research and utilize a variety of techniques to get the most accurate estimate possible. It’s well worth taking the time to run down this list of methods for determining property value!
Remember: knowledge is power! Knowing the value of your home or a home you’d like to buy gives you greater control and leverage in the game of real estate.
What methods have you used to determine property value?