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Determining the value of your home depends on a number of factors and can fluctuate, up or down, over the years. Some of these factors are in your control, such as if you are renovating your home to increase the value of your home. Others, like the current economy and local housing market trends, are less in your control.
Knowing the value of your home is essential to deciding if it is the right time to sell and negotiate a sale. But even if you’re not interested in selling, knowing your home’s value is important because it affects your ability to get financing, like mortgage refinancing or a home equity line of credit (HELOC). It will also help you calculate (or dispute) your property taxes when paying your taxes.
Here’s a guide to help you establish a baseline for your home’s value.
How to find the value of your home
There are different ways to get the information you need, depending on how much time and effort you are willing to put into it, as well as the cost if you seek professional help.
Start with some online research
If you have the time and prefer to do some research on your own, browsing the Internet can be an inexpensive and fairly quick way to determine your home’s value. This approach will not give a completely accurate number, but should give you a rough number to guide your decisions.
Be sure to compare comparable properties. Your search parameters should include:
- Your postal code
- Size (square feet) of your property
- Number of bedrooms and bathrooms
- Age of property
- Outdoor space
Some useful sites should include:
- Local home sales listings. Real estate brokerage websites are a great resource for checking the recent sale price of similar properties in your neighborhood. If you own a condo, the price of recently sold condos in your building should be the most accurate guide, followed by condos in your neighborhood with similar specifications. This will give you an idea of ââthe local housing market conditions and tell you if houses are selling for above or below their value.
- Online Quote Tools. Many real estate brokers offer free online calculators to estimate the value of your home. But keep in mind that these are just estimates. There are many factors that will go into determining the value of your property, not all of which are taken into account by these algorithms.
- House price index calculator. The Federal Housing Finance Agency House price index calculator leverages data on real estate transactions over time to estimate the likely value of a property based on state, metropolitan statistical area, when it was purchased, and original selling price. It gives a general idea of ââwhat your home has enjoyed over the years, but may not be entirely accurate for your home.
Ask a real estate agent to benchmark the market
If your ultimate goal is to sell your property, a real estate agent can help you determine your home’s value and an accurate sale price. Benchmarking Analysis (CMA) provides you with an estimate of your home’s value based on the real estate agent’s assessment of residential and housing market trends in your area, including purchase prices recent for comparable homes.
The advantage of having a real estate agent do this rather than yourself is that the real estate agent:
- Has professional expertise to provide more accurate assessment
- Has better knowledge of the local housing market (sometimes they see ads or sales before being posted online)
- Is generally willing to prepare a CMA for free in order to land your business
Hire a professional appraiser
This is probably the most accurate and sometimes the most expensive option. You can hire a professional appraiser to provide an appraisal of the property’s value, which in turn should help you assess your home accurately. The appraisal report can also be used to identify home improvements and repairs that will increase its value, which is useful if you eventually want to sell.
Appraisal fees typically range between $ 300 and $ 500, but be sure to do your due diligence when hiring an appraiser. An inaccurate valuation could mean making important financial decisions about the future of your home using the wrong information.
Lenders and real estate agents often work with real estate appraisers and may have a list of recommendations to help you with your search.
What if the value of my home increases?
So you’ve done your research or asked a professional to give you an accurate home value, and you’ve found that your home’s value has gone up. First of all, congratulations! There are also several ways to exploit this windfall, if you are interested:
- Sell ââyour house. You should consider selling if it is a sellers market and you would likely get a large payment, which can help you get out of high mortgage payments or move to a larger home. It is wise to consult a licensed real estate agent on this matter.
- Get rid of mortgage insurance. If you’ve made a down payment of less than 20% on your property, chances are you are paying private mortgage insurance (PMI) as part of your monthly loan payments. If your home has risen in value, you may have enough equity to have your PMI canceled, but this will require an appraisal report as proof for your lender.
- Borrow equity. You can borrow money based on the value of your home and use your home as collateral for the loan if you want to take out a HELOC or cash refinance. If you are looking to modernize your home, which will further increase the value, lines of credit like a HELOC are a great way to get the cash you need faster.
What if the value of my home goes down?
Just as there are many external factors that cause a home’s value to go up, so too when your home’s value goes down. This may be because there are too many similar homes for sale with much less demand, creating a buyer’s market. Poor economic conditions, rising crime rates, or nearby foreclosures could also lower the value of your home.
The value of your property could also be lower if it:
- Is old and obsolete
- Needs major repairs
- Lacks the amenities popular with most buyers
How to increase the value of my house
If you want to proactively increase the value of your home, take the time to understand the latest preferences of home buyers, and more specifically what attracts buyers to your area. For example:
- Addition of an additional bedroom, bathroom, patio or finished basement.
- Give the exterior a facelift such as replacing doors, windows, fences or painting walls.
- Update your appliances in the kitchen, bathrooms or your air conditioning unit.
- Make your home more energy efficient to reduce utility bills.
Related: Our latest guides on home improvement
It is always important to remember that these are not universal suggestions and do not guarantee specific results. Decisions are best made in consultation with a real estate professional, while taking into account your unique situation, such as your budget and local housing market conditions.