How to Value Your Home

How to Value Your Home

If you want to sell or refinance, understanding the true value of your home is very important.  Many factors impact your home’s value, including market demand, recent sales in your immediate area, the condition of your home, and improvements you’ve made among many others. 

How to determine what your home is worth

Any real estate agent will tell you that your home is only worth what someone is willing to pay. While there is truth to that, the truest value of your home is determined by an independent appraisal.  Whether you are refinancing or selling your home, an appraisal is required by all lenders involved in the financing.

How do appraiser’s value my home?

An appraiser will do a more detailed analysis of the surrounding market and does not use price per square foot.  Recently sold homes that are most like your home will carry the greatest weight in the appraiser’s report.  These recent sales are placed in a comparison grid with your home, and the specifications of the homes are examined in detail.  Those details include:

  • Number of bedrooms, bathrooms, fireplaces
  • Size of the garage or carport
  • Whether the home has a pool or patio 

The value provided by the appraiser is just a snapshot in time of what your home is worth in the opinion of that appraiser.  Appraisers are independent, impartial, and licensed. 

Does the type of loan impact the appraisal?

When a buyer is using a FHA insured or VA guaranteed mortgage, the value of the appraisal report is specifically attached to that property for a period of up to 6 months.  If for some reason, the contract with the buyer does not proceed, any subsequent FHA or VA buyers, respectively, will be bound by the value of that previous appraisal.  If a buyer comes along with some other form of financing, the previous appraisal is irrelevant.

Be careful of over-valuing your home

When preparing your home for sale, be weary of over-valuing or over-pricing your home for the market.  You want to ask a price that will attract buyers.  If your home is overpriced from the beginning, buyers and their agents may believe you are not serious about selling or may be unreasonable in negotiations.  Keep in mind that real estate agents will likely advise their buyers based on average sold prices for other homes in your area.   

Some of the most common ways people perceive their home’s value is by sales in their neighborhood, the price per square foot of those sales, values on independent sites such as Zillow and Realtor.com.

What distorts an owner’s perceived value are things like your personal sentiments regarding your home, and even some upgrades which you enjoy or spent good money, but may not have added value.

Do a little research

There are various home valuation tools available for free to you on the internet or through mobile apps.  The automated valuation methods that these websites and mobile apps use are good at providing a “range of value,” but be very careful as they are not nearly as reliable as a good real estate agent’s analysis and most especially as compared with a licensed appraiser.

If you are interested in finding out your home’s value, we’ve compiled some resources below:

If you’re interested in selling or refinancing your home, we can connect you with a realator or loan originator that can guide you through the process of determining what your home might be worth and if it’s the right time to sell or refinance.

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