How Can I Estimate My Home's Value?

How Can I Estimate My Home’s Value?

QUESTION: I’m very confused about how much my home is worth. I’ve checked on different websites for estimates but they vary a lot, and a couple of real estate agents have given me other potential prices. How do real estate comps work?

ANSWER: Most people find it difficult to determine how much their home is worth even with the help of an online value estimator because there are so many variables that factor into a home’s value. Essentially, a home is worth only what someone will pay for it. The selling price depends on the state of the local market, the condition of your home, and economic conditions—particularly mortgage rates and consumer confidence because those two issues impact affordability and the willingness of buyers to negotiate.

Since you have checked your home value on multiple websites, you already know that the price you see is just an estimate. While some websites provide one estimate of your home’s value, on realtor.com® you’ll see three: an average estimate, a low estimate and a high estimate.

Those estimates are based on algorithms in the “Automated Value Model” software system that include publicly available tax assessments and recent sales of comparable homes identified by the software. An estimated value does not have the accuracy of an appraisal, and tax assessments don’t typically take into account recent sales or market conditions.

The estimates you see online should be viewed as a starting point to discuss your home’s value with a qualified REALTOR®. REALTORS® have access to data about sales that have yet to be recorded publicly and they know about recent sales, homes on the market, and homes taken off the market for lack of a buyer. Real estate comps, formally known as a comparative market analysis, should take data about all those types of homes into account when evaluating your own home and its current market value.

Comparable homes are those within your community that are similar in size, with properties close to the size of yours, and built around the same time. The number of bedrooms and bathrooms and the amount of finished living space should be the same as your home. If your home is smaller or larger than the comparable ones, your REALTOR® can estimate the difference in your home’s value.

In addition to the basics listed above, comps also must take into consideration the condition and style of your home, the layout, the quality of the construction, the materials used, and any special features. For example, if your home has an exceptionally high-end kitchen compared to others in the neighborhood, your REALTOR® may increase your estimated home value. On the other hand, if your home has two full baths and others in the community have three full baths, your value could be a little lower than other comparable homes. The amount added or subtracted from your home value for a particular feature, such as a swimming pool, isn’t an exact science, but an experienced REALTOR® with knowledge of your community can make an educated guess.

A good REALTOR® will also factor in market conditions. If there’s an imbalance with more buyers than sellers, your home’s value is likely to be higher than recent sales since competition can drive up prices quickly. If the market in your area has slowed and sellers are competing for buyers, then your value could have declined.

When considering selling your home, interview several REALTORS® and choose someone with experience and a trustworthy reputation to estimate your home value.