Your house is much more than a home—it’s likely one of the biggest purchases you’ll ever make, with a value that makes up a significant proportion of most people’s net worth. As such, you’ve probably wondered from time to time what your home is worth.
Determining the answer is not as simple as referring back to your sales agreement or mortgage papers. What you paid for your house when you purchased it merely reflects what your house was worth to you—and the real estate market—at a specific point in time.
In reality, housing values are dynamic and they fluctuate based on a number of factors. Some things, such as keeping your house in good repair, are within your control. Other external influences, such as the market, mortgage rates, and other considerations, can also affect the value of your home.
Estimating the Value of Your House
There are a number of ways you can determine the estimated value of your house. The easiest, and fastest, way to get started is by using an online home valuation calculator. These tools provide a general ballpark estimate of the value of your home based on your address. Such estimates are typically based on publicly available information including average home sales in your area, property tax assessment information, market trends, and other data.
Once you have a rough estimate of your property’s worth, you can use other cues, such as sales and mortgage trends, to get a sense of whether your property value is likely to increase, decrease, or remain stable.
A professional appraiser or real estate agent can also help you get a more precise estimate of what your house is worth. An appraiser will consider both the local housing market and the unique characteristics of your property.
Real estate agents, meanwhile, will typically first perform a comparative market analysis (also called a comp or CMA). This is an estimate based on actual data from recently sold homes that are most similar to yours.
If you are looking to sell, you may want to consider getting a comparative marketing analysis from several different real estate agents to help you assess their knowledge of the local market.
But understanding the various criteria real estate agents use to determine listing prices can also help you to get an accurate picture of what your house is worth.
A Home’s Worth: 3 Factors to Consider
Every house is unique—but the factors used to determine their value are fairly consistent.
Neighborhood: There’s a good reason why “location, location, location” is one of the most popular mantras in real estate. The same home, in the exact same condition, will fetch different prices depending on where it is. Proximity to schools, shopping, public transportation, and other resources and infrastructure can increase the desirability of a neighborhood, and thus, the value of the home. Safety considerations, such as crime rates, sidewalks, and traffic signals, can also impact house values.
House specifications: Fixed attributes such as the size of your lot, square footage and age of your home, number of bedrooms and bathrooms, parking, or built-in heating and cooling systems are among the criteria buyers will typically consider (and agents may factor in while developing a comparative marketing analysis).
House condition: Well-maintained houses with high curb appeal can typically fetch better prices than run-down fixer uppers. As such, the most controllable aspect of your home’s value is its condition. To evaluate the condition of your home, take stock of any required repairs and updates, both major and superficial, as well as upgrades such as premium kitchen appliances, flooring, and any renovations you may have performed.
There are additional factors outside of your control that will affect the value of your home—though these may be less significant if you are not imminently considering selling.
For example, the state of the economy and mortgage rates may dictate others’ appetite for real estate purchases, as well as how much they are willing to spend. Seasonal fluctuations such as holidays and weather can also affect home purchasing patterns.
Increasing the Value of Your Home
Though there are some factors that may be out of your control, there are things you can do to increase the value of your home. If you are considering selling soon, staging your house or making small improvements, such as tidying your garden, can go a long way towards appealing to buyers—without a big financial investment.
But if you are considering investing in renovations and upgrades, it is helpful to know which will deliver the greatest returns. An online calculator can compare different projects to determine how various home improvements might affect the resale value of your home.
Why Your Home Value Matters
If you are considering selling your house, “How much is my home worth?” is likely one of the first things you’ll wonder. But even if a move isn’t something you are considering right now, there are other reasons why it might be important to know the actual value of your home.
For those considering relocating, getting a reliable estimate of the value of your house will inform how much you can afford to spend on your next house.
As taxes, real estate agent commissions, and some other fees will be based on the actual sale price of your house, this valuation will also help you to estimate some of your moving costs.
There may be other reasons for knowing how much your house is worth even if you’re happy where you are. For starters, as one of the greatest assets in many people’s financial portfolios, your home’s value can be helpful for long-term money planning, including retirement and estate planning.
If these things seem a long way off, there are immediate benefits to being informed about your home’s worth, too.
Your property tax bill is based on the market value of your house and may change from year to year, based on your municipality’s estimate of its worth as determined by a government assessor.
A reliable estimate of the value of your home can help you to identify discrepancies in the assessed value. If you believe there is an error, you can file an appeal in attempt to get your property tax bill reduced.
Having an accurate estimate of the value of your home is also important for obtaining appropriate insurance coverage. If your estimate is too low relative to the actual value of your home, you run the risk of being underinsured in the event of a claim. Too high, and you’re paying for coverage you don’t need.
Your home’s value can also help you to access money to pay for home improvements, a financial emergency, or other needs that may arise. If the current value of your home is more than it was at the time you purchased it, you may be able to tap into that increased value with a cash-out refinance.
Home Improvements and Your Mortgage
Even if you’re not looking to sell, adding value to your home may result in savings in the near term.
The amount of equity you own in your home can be determined by subtracting what you owe on your house (or your mortgage principal) from the current total value of your home—so if your property value has increased, you have more equity than when you purchased your home.
Typically, buyers who purchase a home with less than 20% down are required to pay for private mortgage insurance (PMI)—a fee that is based on a percentage of your total mortgage.
If the increase in your property value brings your equity over the 20% threshold, you can ask your mortgage loan servicer to cancel the PMI .
Another option may be able to refinance your mortgage without that fee. And even if you aren’t paying for PMI, an increase in property value can improve your loan-to-value ratio (LTV), giving you access to better interest rates.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.
SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.