3 Easy Steps to Determine What Your Home Is Worth
Selling your home is a big decision. It can feel like a giant mountain of a task, and you may have no idea where to start. Your worst nightmare is selling way below value and losing money. But what’s the right price?
That is the question when you’re selling your home.
If you don’t know how to determine your home’s value, you’re not alone. You’d be surprised at how many homeowners are absolutely clueless about what their home is truly worth.
Don’t be like the average homeowner. Here’s how to educate yourself about your home’s value.
3 Steps to Learn Your Home’s Value
When you know the facts, you make better decisions. It’s plain and simple. Here are three easy steps that will help you understand your home’s market value:
Step 1: Know What “Home Market Value” Really Means
Believe it or not, your home’s market value is not based on the following:
- Your monthly mortgage payment
- Your opinion of how great your home is
- Your memories of your home
In a nutshell, market value is what buyers are willing to pay for your home.
As a homeowner, it’s tough to see your home the way a buyer would. Although you think little Danny’s handprints in the front porch pavement are cute, a potential buyer will see them as just one more thing to fix. Keep in mind that a serious buyer will take critical mental note of the following:
Location, location, location: How close is your home to highways, schools and shopping centers?
Safety: Does your neighborhood have sidewalks, underground electrical lines and a low crime rate?
Curb appeal: Is your house pretty to look at? Or is it an outdated eyesore?
Square footage: How big is your home? Does it have any weird layout issues?
Number of rooms: Does the ratio of bathrooms to bedrooms make sense?
Updated appliances: Will the buyer need to plan for the cost of a new fridge, dishwasher or other items?
School district: How are the schools rated in your area? Are there multiple options?
Some factors affecting your home’s market value are out of your control. For instance, if the economy is tanking, no one’s going to pay top dollar for a house. The final price tag may also depend on:
Mortgage interest rates: A mortgage is a huge financial commitment, so a high interest rate will keep some buyers from pulling the trigger.
Time of year: Homes just sell better during certain months than they do in others. For example, most buyers won’t choose to move during the middle of the holiday season or at the beginning of the school year. Expect to get more or fewer offers depending on the time of year.
Supply and demand: If there are a ton of houses on the market, that means you’ve got competition. On the other hand, if there are more interested buyers than there are “For Sale” signs, raise the price like the savvy seller you are!
How similar homes in the area have sold: How much are people willing to pay for a home like yours in your neighborhood? Are there many foreclosures in your area? This will give you a lot of insight into how desirable your home may be—or how much someone might be willing to pay.
If you’re trying to sell your home, an expert real estate agent can help you analyze all this information to create your ideal listing price. Want to investigate on your own? A quick online search can give you a ballpark number.
Step 2: Use Free Online Tools to Estimate the Value of Your Home
If you search for your address on an online real estate marketplace, you’ll likely find all kinds of facts about your home that are public record, including:
- Type of home
- Year the home was built
- Number of rooms, bedrooms and bathrooms
- Square footage of the home
- Square footage of the lot
- Heating and cooling systems
- Number of parking spots
- How much you and each previous owner paid for the home
Along with these home facts, you’ll see an estimated market value. Online tools put this number together by looking at the sales of homes in the area that are similar to yours, local tax assessments, and whether homes in your area are increasing or decreasing in value over time.
Before you get too excited about this number and slap a price on your house, dig a little more. While these online estimates are helpful, they’re not always accurate. The estimates are only as reliable as the amount of public record data the real estate websites can access. The less data gathered for your particular neighborhood, county and state, the less you can depend on this number.
As a home seller, the real value you’ll get from these sites comes from the information you find about your housing market. Scroll through the data and see if you can answer any of these questions:
Is my home value trending upward or downward?
How does my home value compare to other homes in my neighborhood or zip code?
How does my home value compare to those in other zip codes in my area?
What’s the market temperature? Is it a hot or cold time to sell?
That’s useful information you can discuss with your real estate agent when it comes time to set a price for your home.
Step 3: Work With an Expert and List Your Home at the Perfect Price
If you’re interested in selling your home, contact an agent no matter what you find online. Your pro will have even more detailed information to help you make better decisions about selling your home.
That’s because a real estate agent doesn’t pull stale information from the shelf. Unlike online tools, real estate agents have access to a multiple listing service (MLS) database of homes for sale in the area that will allow them to run an accurate comparative market analysis (CMA).
A good real estate agent will take the time to come and look at your home. They’ll consider the landscaping, the condition of the house, any upgrades you’ve added and all those things that aren’t listed in public records but make a real difference to potential home buyers.
Agents use the power of real-world experience to compare your home’s nitty-gritty details to recent sales and current listings.
Let’s say you installed a new roof last year but your kitchen is straight out of the ‘70s. An experienced agent knows how to weigh those factors and still come up with a competitive price. Remember, the market value is not based on formulas. It’s based on how much someone is actually willing to pay for your home.
No computer can determine that, and your success as a seller rides on it.
Price your home too high and buyers will pass you up without ever stepping through the door. Price it too low and you could lose thousands of dollars. The right price gets you the most money in the least amount of time.
Don’t Miss Out on Free Advice!
If you want to know how to accurately determine your home’s value, ask for a free comparative market analysis from a real estate agent you trust. A true pro puts service above sales and takes time to explain your options. Then you can make the decision that’s right for you.