Written in collaboration with Garbiel Ted

Wondering what a house you want to buy or already own is worth? Well, the simple answer is that the residence is worth what a buyer will be willing to pay to acquire it. The more detailed answer is that its value will be determined by the prevailing market conditions. Price may also be affected by whether you are asking a county tax assessor, realtor, or a financial lender.

Learning how to calculate the value of your property with trained professionals and online tools prepares you to refinance, sell, buy, or even tap into your available home equity options.
According to Property Price Advice, you can use the following 4 ways to value your property:

1. Using online valuation tools

A quick search online on “how much is my home worth?” will reveal dozens of house value estimators. In fact, a recent survey in the US found that 22% of homeowners who established the value of their properties used online value estimators.

Professionally, the tools are known as AVM or automated valuation models. The tools are typically availed by real estate websites and lenders. They try to predict the value of your home based on recent listing prices and sales in your region. They also rely on public records like tax assessments, ownership deeds, and property transfers. However, it is important to consider talking to a local realtor to gain more insight into the valuation process, even after using an online valuation tool.

2. Obtain a comparative market analysis

If you think you are ready to dive even deeper in the home valuation process, consider requesting a realtor for a CMA or comparative market analysis. The CMA may not be as detailed as the professional appraisal, but it does help to provide some insight.
It will provide you with the real estate agents evaluation of the market and home, to come up with a value estimate. This value is particularly important for clients looking to have their houses listed.

A local realtor can provide you with the CMA for a small fee and in some cases at no cost at all. On the other hand, the realtor may do so with the hope that you will hire them as your listing or selling agent.

3. Use the FHFA HPI

If you do not trust AVMs to furnish you with a good estimate, you can always turn to the FHFA HPI. This is the Federal Housing Finance Agency pricing index calculator. The calculator uses a scientific approach to calculate the value of your house.
According to experts in the housing industry, the tool being used by the FHFA relies on repeat sales to calculate the value. The tool is armed with thousands of mortgage-related transactions that have been collected since the 70s. It uses this information to track value changes in a house after every sale. It then compiles this information to determine how the prices may have fluctuated in various market condition.

Note that the housing price index calculator is not adjusted for inflation or seasonally. The values may, therefore, not be as accurate as you prefer.

4. Hire professional appraisers

All lenders will want to perform an appraisal before any mortgage loan can receive approval. Nonetheless, homeowners are at liberty to call in appraisers at any time to help them estimate the value of their houses.

A new survey indicates that 28% of all homeowners determine the value of their property through a professional appraisal. Some of the things evaluated by an appraiser include:

  • Market: the neighbourhood, city, and region where the property is located
  • Property: characteristics of the residence including any improvements that have been made, as well as the land where the property sits.
  • Comparable properties: vacancies, listings, sales, depreciation, costs, and other attributes possessed by similar houses in that region.

The appraiser combines all this information to come up with a final opinion on the value of the property. He or she then delivers the report to the property owner.

Why property value is important

Knowing the true worth of your property makes it possible for you to price your home. You also get to determine whether a certain property has been properly listed. The benefits that come with finding its value does not end with the sale or purchase: annual property taxes, refinances, insurance premiums, and home equity lines of credit are all dependent on the property value

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