When you are ready to sell your home or are going to refinance, take out a line of credit or home equity loan, you’ll have to know its value. You can hire a professional property appraiser, or, contact a local licensed real estate professional for a comparative market analysis, or, CMA. If you want to know the value without having to do any of this, you can find its market value with just a little research. If you take your time and get the right information, you’ll have a very good idea of your property’s true market value. How to estimate the value of your home depends on a number of factors, like the health of the local market, but it’s not usually too difficult to calculate.
How to Estimate the Value of Your Home
Where many homeowners go wrong in estimating the value of their residences is basing their calculations on properties which just aren’t good comparables. These include homes which are currently for sale and homes in different neighborhoods. Another mistake is to believe the improvements you’ve made since you’ve lived in the home are enough to bring its value way up. The truth is only a few home improvements will return 90 percent or more.
“If you’re serious about selling your home and want an informative report on your home’s value and comparable sales in the neighborhood, [go to Realtor.com]. Click past the front page and Realtor.com becomes a trove of information about mortgages, real estate trends and other topics. In the Home & Garden section, for instance, you’ll find advice about how to tackle common home improvement projects and save money on energy.” —USA Today
That being stated, there is value in certain home improvements. While a complete home office makeover won’t be a huge selling factor, an updated kitchen will have something to offer. While you probably won’t get dollar for dollar out of the resale, your price can be increased slightly, if it helps the property to stand out from its competition. Understand that there are other factors which will ultimately dictate what the home is actually worth. Here’s how to estimate the value of your home:
- Find nearby comparable properties. To estimate the value of your home, you’ll need several comparable properties that have sold in the past three to six months. Comparable properties ought to have nearly the same livable square footage, same number of bedrooms and bathrooms, and, homes with similar features and amenities. These should also be in your neighborhood or a neighborhood like your own.
- Discard any homes that aren’t representative. You’ll have to look at the details of the homes on your comparables list to know if they are or are not truly representative. For instance, if there’s a home on the list that’s on a busy street while your property is on a quiet cul-de-sac, it’s not comparable. In addition, homes that sold very quickly or lingered on the market for many months are also not good comparables.
- Average the prices of your list of comparables. Once you have the list paired down to truly comparable properties, add-up the selling prices and divide the sum by the number of homes. This will yield a rough but good estimate of your property.
- Make minor adjustments to the price, if necessary. The trickiest part of estimating the value of a home is to make minor adjustments, based on particulars. For instance, if your home has more livable square feet, you’ll need to factor that positive to slightly increase the value. By contrast, if the rooms in your home are just a bit smaller, that too will need to be factored.
Once you have a value estimate, you can then start the process of listing it for sale. When it’s on the market, you’ll want to make smart decisions, and, avoid any home selling mistakes.