Whether you bought your home decades ago to raise your family, years ago as an investment, or during COVID as an escape, there’s one thing you can count on: its value has changed. All indicators point to an uptick in home values, but of course your property’s worth is based on many factors, from your neighborhood schools to the condition of your plumbing.
Home value (or current market value) is loosely defined as the amount a buyer is willing to pay for your home. It’s a bit of a moving target; one prospective buyer might offer you thousands of dollars below your asking price, and another, many thousands above, each for their own reasons. But there are some rules of thumb, and several tools you can use to estimate what your home is worth on the current market.
- Use an online estimation tool such as Zillow or Trulia (you can find more by searching ‘online real estate valuation tools’). These sites will tell you what ‘similar’ homes have sold for, but may not give you the most accurate picture.
- Hire a professional appraiser. You will have to pay for their services, but it will probably give you the most accurate idea of your home’s value, as the appraiser will factor in ‘intangibles’ such as location, size and condition, and comparable homes.
- Consult a real estate professional, who will use a current market analysis to give you an idea of what homes like yours are worth on the current market. You probably won’t get as detailed a report, but a local REALTOR® should have a good idea what homes go for in your area.
- Check real estate comps – recent sales of homes within a specific area, with similar characteristics to yours. Find at least three similar properties to be sure you aren’t looking at a fluke that sold significantly above or below market value. A real estate website can help you with this, or you can use other online tools such as MLS (Multiple Listing Service) comps, or research public property records yourself.
Once you have a solid idea of your home’s current value, you can compare it to what you paid to see how much it has changed. Even more useful, subtract the current amount of your mortgage and other liens (such as money you’ve taken out through a homeowner line of credit) to find out how much equity you have in your home. Your home equity is like money in the bank!