If you’re hoping to sell your home, knowing your property’s value is essential for pricing it right to make buyers bite. Or, maybe you don’t want to sell your home right now, but are just curious what your house is worth—and whether your real estate investment has risen in value which there is a good chance this is the case.
In either case, having an accurate grasp of your home’s estimated market value can come in handy. And there are a variety of ways to do that, many of which are free and easily within reach Here’s some ways to find that magic number, and why having an accurate estimate matters whether you want to sell your home or own it for the long haul.
How to find home value estimates online
One easy starting point with a home valuation is to enter your address into an online home value estimator, which will, within seconds, present you with a free estimate of what your home is worth, based on data such as its square footage and recent home sales in the area. Realtor.com’s home value estimator is one source you can look at.
While these free valuations will help you get a general idea, remember, they’re just ballpark figures. This is our area of expertise as real estate brokers, and we are happy to help you with this estimate. We have access to a vast database of information with recent sales to help you hone in on that number.
How real estate experts determine their own home value estimates
We specialize in answering the question “what is my home worth?” for our clients, which wedo by running a comparative market analysis. This process involves finding similar properties (“comps”) that sold within the past 90 days.
The most accurate comp is a home that’s nearby, similar to yours in square footage, and has the same number of bedrooms and bathrooms. (Ideally, the lot size is also equivalent, but that’s more important in rural areas, where homes are set on multiple acres.) Once we find a few comps, then we evaluate the features and amenities in the homes and can average those to come up with a baseline of your own home value.
For instance, “if your neighbor’s home is listed for $400,000 and you want to list yours at $500,000, you’d better be able to clearly explain the difference to prospective buyers.” Or else adjust your number accordingly, or you will definitely run into appraisal problems. We can all say what we want our home to be worth but the numbers and evidence that are in the comps are our most accurate evaluation.
What is my home value to a buyer?
Sellers need to consider how home buyers search for properties online. Let’s assume your home’s fair market value is $503,000. Yet many people search for homes on the web using $20,000 or $25,000 increments. The upshot? Listing your home for $503,000 could prevent your listing from being seen by buyers who are searching for homes in the $475,000 to $500,000 bracket, so asking for $500,000 might generate more traffic—and maybe even a bidding war to push that final number well above your expectations.
Also, avoid listing your home at an odd dollar figure it isn’t like you are buying a new broom where retailers present product prices ending in $0.95 or $0.99, this just doesn’t apply to real estate where you are dealing with $100 thousands of dollars, it’s hard to justify awkward pricing. It ends up being confusing to buyers. For instance I recently saw a listing for $687,790. I was thinking how did they come up with that number – it was just odd!
Try to remain objective
Sellers always think that their home is worth more than it is, because of their personal attachment, and they usually can tell you how much every improvement they made cost them and of course want to make sure that they get that money back out of the home.
It’s hard to boil down years or decades of memories in a home to a number. It’s also hard to accept that your home is worth less than what you paid for it, or that you can’t just tack on the full dollar amount of the renovations you’ve made. On average, renovations will reap you only a 64% return on investment, although that varies based on the type of upgrades you’ve made. Just because you added an awning or shade sails or a recuirculating hot water system, doesn’t mean that is going to add value to your appraisel – somethings we do to improve our homes we have to consider that is may only be of value to ourselves and the next buyer may see it as a liability. Case in point a hot tub or sauna or soaking tub, one buyer values these but the next sees it as a liability.
Why it’s important to know how much your house is worth
Estimate your home’s value as too high, and it could wind up sitting on the market. That’s a big problem, because a property that goes unsold for an extended period of time (e.g., more than 30 days) often becomes stigmatized.
Buyers get suspicious when they see a house that’s been on the market for a while. They think that something is wrong with the home.
If that’s the case, the seller may have to make a significant number reduction—sometimes dropping the number below market value—in order to nab a buyer.
Pricing your home below market value in an attempt to stir up interest and generate multiple bids can also backfire. Granted, that strategy could work in a hot seller’s market, but underpricing your home frequently leads buyers to assume that your home is worth only its list price.
Your best bet: Know what your home is worth, and list your home close to that figure—aka its market value. When in doubt, turn to us your real estate professionals to help you cut through the haze and help you pinpoint the right price