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Your home is probably one of your biggest assets. But, because home values fluctuate with the market and over time, you may not know what your home is realistically worth. Depending on your reasons for seeking a home valuation, there are multiple ways to find out your home's current value. Here are four common ways to find out what your home is worth.
1. Use an Online Valuator
Home-selling sites like Realtor, Redfin and Zillow offer online estimates of your home's value. Online estimates are fast, easy, free and available anytime—although they may be less accurate if your home hasn't been on the market for a long while.
Best use: Online valuators are ideal when you want an informal ballpark on what your home is worth. These tools typically use some combination of public and multiple listing service (MLS) data, local sales trends and information you provide to develop an estimate. They generally don't account for the unique characteristics of your property, renovations you have (or haven't) done or special features of your neighborhood—all of which may add or detract significantly from your home's value.
Still, when you want a fast read on your home's current value, online valuations are an easy place to start. You can try running multiple valuations to get a range of opinions.
2. Check Home Sales in Your Area
Estimate your home's value yourself by reviewing recent home sales in your area. This information is available online on real estate sites: Just make sure you're looking at actual sales and not listing prices, which may vary in either direction from the price a home actually fetches.
Best use: Doing your own analysis is a great way to double check online valuations—or even an agent's or appraiser's analysis. Develop your own independent perspective or confirm what other sources are telling you.
The downside? Performing your own manual check of comparable sales is more work than you need to do if you just want a quick sense of your home's value. At the same time, unless you're a real estate agent or professional appraiser, it may not give you sufficient information to set the right price for your home or qualify for a mortgage.
3. Work With an Agent
A real estate agent can help estimate your home's value based on sales of comparable properties in your area. Comparative market analyses—also referred to as "comps"—consider basic information about your home along with market trends and recent home sales to arrive at an estimated sale price.
A real estate agent may run comps for you free of charge if you're considering listing your property with them.
Best use: A good real estate agent adds human insight to the valuation process. If you're planning to sell, an agent may be able to tip you off on whether inventory in your neighborhood is high or low, what buyers are looking for, what's selling (and what's not) and a host of other factors that don't show up in an online valuation.
Using recent sales data, an agent can create comps that reflect actual market trends in your area and offer an expert opinion on how to get the best price for your home.
4. Hire an Appraiser
A licensed or certified real estate appraiser can provide an unbiased valuation of your property that includes market trends, sale prices of similar properties, the physical condition of your home and other factors that may affect your home's value.
Best use: A formal appraisal may be required if you're buying a home or refinancing. Your lender may arrange one as part of the loan approval process. You might also consider getting an appraisal if you've recently inherited a property, to document the new cost basis for any future sale or if you're dividing property in a divorce. However, since an average home appraisal costs $313 to $422, according to data from HomeAdvisor, many people skip hiring an appraiser unless they specifically need one.
Why Do You Need to Know Your Home's Value?
There are a number of reasons you might want or need an estimate of your home's value. Here are a few times when your home's fair market value may be of interest:
- Getting a mortgage or home equity loan: Home lenders need to know your home's fair market value because your home is used as collateral on your loan. If you should default on your mortgage, your lender would rely on selling your home to recoup their money. Lenders use your home's fair market value to help calculate how much loan they're able to approve.
- Listing your home for sale: Choosing the right listing price can be a key factor in whether—and how fast—your home sells.
- Inheriting a home or property: When you inherit a home, the cost basis of the property resets. In plain dollars, this means the house your parents bought for $50,000 in the 1970s resets to the current fair market value—say, $500,000. When you sell the home, your capital gain is the sales price minus $500,000, not $50,000.
- Getting a divorce: Your home's fair market value may be used when dividing property in a divorce.
- Understanding your net worth: Having a general idea of your home's fair market value helps you better understand your financial position, from estimating how much home equity you have to knowing what your options are for moving out or moving up.
For What It's Worth
Knowing your home's value can help you secure a home loan when you're buying and set the right listing price when you sell. In between, a formal or informal valuation gives you an idea of your home's worth in a divorce, as part of an inheritance or simply to better understand your own net worth.
A home appraisal is key to securing a new mortgage or refinance. Getting an approval—and the best rates and terms—on a new home loan also depends on your credit. You can check your credit report and credit score at Experian, giving you valuable insight into your ability to qualify for a new loan.