What’s My Home Worth? A Guide to Home Valuation
Are you wondering, “What’s my home worth?” Whether you’re considering selling, refinancing, or just curious about your property’s value, understanding the true market value of your home is crucial.
Let’s explore how home values are determined and the three key perspectives that impact pricing: the seller’s perception, the buyer’s viewpoint, and the professional appraisal. Aligning these values is essential for a successful transaction.
And if you frequently check Zillow, stay tuned—I’ll reveal the truth about Zestimate!
What is Market Value?
Market value is the price a fully informed buyer is willing to pay for a home, based on comparable sales in the area. Realtors use “comps” (comparable sales) to determine fair market value. These comps include recently sold homes with similar features and locations. Understanding comps is key to pricing a home correctly.
How Are Comparable Sales (Comps) Selected?
To determine accurate comps, real estate professionals consider:
- Timeframe: Homes sold in the past year, with a focus on active and pending sales.
- Location: Properties within a 1-mile radius or the same school district, expanding to 2 miles if necessary.
- Property Features: Homes with similar bedrooms, bathrooms, square footage, lot size, garage spaces, and finished basements.
- Upgrades & Condition: Renovations such as a new roof, updated kitchen, or finished basement can impact value.
- Age of the Home: Homes of similar age offer better valuation comparisons.
Types of Home Valuation Reports
There are two main types of reports used to determine home value:
- Comparative Market Analysis (CMA) – Prepared by real estate agents, CMAs use recent sales data to estimate a home’s value.
- Appraisal – Conducted by a licensed appraiser, typically required by lenders to verify a home’s value before approving a loan.
Both reports analyze historical data, meaning they reflect past sales trends rather than predicting future market changes. Factors like economic conditions, interest rates, and local demand also influence home prices.
Zillow Zestimates: The Truth
Many homeowners check Zillow’s Zestimate for a quick home valuation, but is it accurate?
Zestimates pull data from public records, which may not reflect recent upgrades or unique home features. For example, Zillow won’t know if you installed a new roof or remodeled your kitchen. That’s why it’s essential to have a real estate professional evaluate your home in person.
Factors That Affect Your Home’s Value
- Location
• Proximity to urban centers, parks, public transportation, and schools can increase value.
• Being near highways or on a busy street can negatively impact value. - Market Conditions
• Low inventory and high demand drive prices up.
• High supply with low demand can lead to price drops. - Property Taxes & Assessments
• Higher property taxes may deter buyers and lower market value. - Economic Influences
• Job market shifts, inflation, and mortgage rates play a significant role in home values.
What Happens When an Appraisal Comes in Low?
If an appraisal is lower than the agreed purchase price, buyers may need to cover the difference in cash or renegotiate with the seller. This is especially important for financed buyers, as lenders won’t approve a mortgage higher than the appraised value.
Final Thoughts: Working with a Real Estate Expert
Ultimately, your home is worth what a buyer is willing to pay. While appraisals and comps provide guidance, market conditions and buyer preferences also shape property value.
A knowledgeable and local real estate agent can help you navigate pricing strategies, market trends, and valuation reports to ensure you make informed decisions.
Thinking about buying or selling? Contact me today for a free home valuation!
