Are you thinking of selling your home or refinancing? How you answer this question will help determine where you ought to look for help in determining the value of your home.
How To Determine The Value Of My Home?
There are many methods of determining the value of a home. Depending on why you are trying to find out the value of your home will help you decide which method is best. The following are some ways to determine your home’s value and why you might use these methods.
Tax Assessment To Determine Value?
The tax assessed value of your home is almost never used if you are trying to sell your home or get a mortgage for a refinance or when buying a home. The tax assessment value of your home is used by local government to know how much property tax they should collect from you.
Typically, government assessed tax values are lower than actual market values. This is because the government only reassesses value every 2-3 years and property values typically appreciate from year to year. In a normal real estate market real market values go up while tax assessed values stay the same for several years.
The only time you may be interested in the tax assessment value of your home is if your real estate taxes seem too high or perhaps even too low. Typically, most local government send out notices about value changes and or tax assessment changes that indicate changing real estate tax amounts to be due in the following year. Included with this notice should be your home's value according to the tax assessor. You will also probably be given some way to dispute your tax bill or assessed value on that statement if you want.
Home Appraisal and Sales Comparable Values
This method is by far the most used method in determining a home’ value if financing is used with the home. Mortgage lenders, banks and credit unions all require some form of independent third party appraisal to determine the value of your home if you are getting a mortgage.
Appraisers who do residential appraisals use one main method to determine the value of your home. They use a method called Sales Comparison Approach. When an appraiser appraises your home they will locate at least three similar homes to your home that have recently sold. They also try to make sure that these homes are located as close to your home as possible. They do this as homes in different areas of a city that are the same size could have completely different values depending on the neighborhood, suburb or exurb that they are located in.
Some of the characteristics an appraiser will use to determine the value of your home are: proximity to major roads, highways, employment centers, commercial shopping areas like malls, age and condition of your home, amenities in the home like a pool or not, central air or not, lot size, type of sewage, type of roof, type of heating system, are there energy efficient upgrades made to the property like solar electric systems or solar hot water systems installed, number of bedrooms and bathrooms, and other physical characteristics of the home.
Basically, the appraiser compares your home to the sales of homes they found and adjust the sales price of these homes according to the amenities found in your home. Once they make all of their adjustments they can come up with a value for your home.
To use this method however be ready to pay at least $350 or more for the appraisal. If you are going to be getting a mortgage you will have to pay this amount either upfront when the appraiser inspects your home, or at the settlement table when you get your mortgage. Appraisers do not work for free, so if you get an appraisal done and you don’t get a mortgage for some reason, don’t be surprised if you get a bill in the mail.
On Line Valuation Websites
Another method to use to determine the value of your home is online valuation websites like Zillow.com. This method is not valid for getting a mortgage, but is a good place to start when you are either trying to get a value established for your home if you are going to put a for sale sign in your front yard. You can also use these sites to compare other homes near a home that you are looking to purchase to see if the purchase price that is listed, or that you are thinking of offering is realistic.
These online valuation websites are somewhat limited because they determine value without the benefit of an appraiser going to your home to look at specific upgrades and condition of your property. Nor can they take into consideration all of the data that an appraiser uses in determining the value of a home. These sites do look at the sales prices of homes in close proximity to the home you are trying to get the value for so at least you’ll get to see what others paid for a somewhat similar home.
Ask a Realtor What Your Home Is Worth
Probably your best way to find out what your home is worth if you are trying to sell your home is to ask a real estate agent. Active real estate agents stay on top of property values and what homes are selling for in a particular area. This is their job. The same can be said about appraisers, but appraisers are not in the business of selling homes so they aren’t up on the same types of market information and trends like real estate agents.
Getting a real estate agent to give you a market value of your home, or a comparative market analysis – CMA – might cost you some money. Certainly, it will cost you less money than an appraisal so it might be worth your time and money to get one for your home if you are serious about selling your home. You won’t be able to use the CMA for a mortgage, nor can a home buyer use it for their mortgage, but it is useful in helping you determine a sales price.
So you can see, there are many ways to determine the approximate value of your home. Ultimately, if you are selling your home, the value will be determined by what a seller is willing to pay you.
