Of course, if you are thinking of selling your home, one of the first items on your agenda is determining its current value. But knowing the value of your home isn’t just important for the purposes of selling, it can also bring you peace of mind and give you a clearer sense of your financial health. Likewise, it can help you to determine how much you can afford if you are thinking of buying elsewhere, if you need to tap into your home’s equity for emergency funds or an important desire or life event (a wedding perhaps?), or if you’d potentially like to refinance to try and get your interest rate and payments lowered.
Factors for determining your home’s value
There are a number of factors that go into determining the value of a home. The current real estate market is clearly a big factor. Searching sites like Zillow, will give you a basic outline of how much homes in your neighborhood are going for or at least what they are priced at. Check to find homes that are comparable, meaning similar square footage, same number of bedrooms and bathrooms, similar building materials, whether it has a garage, and the size of the lot or acreage. Of course, the age and condition of your home are certainly important to the value as are the number and price tag of improvements that you have made to the home since purchasing it. Likewise, improvements that need to be made, like a new A/C unit or updated wiring will play a role in the price as well.
Federal Housing Finance Agency’s Calculator
There are a number of tools out there that will help you to determine your home’s value. One free and quick way is using the Federal Housing Finance Agency’s HPI calculator. You have to know the quarter and year you bought your home, what quarter you want the valuation in and the price you paid for your home. This valuation is very generalized, but it gives you a quick and dirty ballpark figure. It is based on the average appreciation rate by state.
Other Online Calculators
There are a number of other online calculators that you can try out as well. Be cautious when choosing which sites to use. Many of them are marketing strategies, or they are interested in generating leads for contractors (to make improvements) and most especially for real estate agents. Unfortunately, you may get bombarded with (sales) emails if you aren’t paying attention. If you are required to give out a phone number, just say no thanks. Likewise, remember these sites can really only give you a generalized valuation because there are far too many factors that go into a home’s value than just its address.
Test driving online calculators
I tried valuing a friend’s home who lives in Grand Rapids. Redfin.com gives you a quick and dirty estimate and then the option for a free, no-obligation consultation with an agent. The home was estimated to be worth at $155K. I then checked JP Morgans free estimator got an estimate of $121K. Finally, I tried Penny Mac LLC, a loan service company and got an estimate of 160K, so they ran the gamut.
If you want something more precise and you have a need to know the value for resale or for refinancing, you can get an appraisal. Appraisers look at the market value of your current location, improvements you have made, current comparable properties’ asking and purchase prices, and depreciation and improvements that need to be made when determining the value of your home. Of course, these appraisals are going to cost you anywhere from $200 to $600 depending on where you live.
Call your real estate agent first
Another good and reliable source to go to for a valuation is your friendly real estate agent (especially if you want an estimate that isn’t just based on algorithms). It’s his or her job to stay abreast of the ever changing real estate market, and he or she can give you a location specific value on your home. Never mind, that should you decide to sell your home, your real estate agent will be your biggest cheerleader and greatest resource in getting your home on the market and off your hands.