Have you ever wondered "How much is my house worth?"? If you're hoping to sell your home, knowing your property's value is essential for pricing it right to make buyers bite.
Or, maybe you don't want to sell your home right now, but are just curious whether your real estate investment has risen in value.
In either case, having an accurate grasp of your home's estimated market value can come in handy. And there are a variety of ways to do that, many of which are free and easily within reach online. Here's how to find that magic number, and why having an accurate estimate matters whether you want to sell your home or own it for the long haul.
How to find home value estimates online
One easy starting point with a home valuation is to enter your address into an online home value estimator, which will, within seconds, present you with a free estimate of what your home is worth, based on data such as its square footage and recent home sales in the area. While this free valuation will help you get a general idea, remember, it's just a ballpark figure.
How real estate experts determine their own home value estimates
Real estate agents specialize in answering the question "what is my home worth?" for their clients, which they do by running a comparative market analysis. This process involves finding similar properties (“comps”) that sold within the past 90 days.
The most accurate comp is a home that’s nearby, similar to yours in condition, square footage, and has the same number of bedrooms and bathrooms. (Ideally, the lot size is also equivalent, but that's more important in rural areas, where homes are set on multiple acres.) Once your agent finds a few comps, then she averages those figures to come up with a baseline of your own home value.
Why it's important to know how much your house is worth
Estimate your home's value as too high, and it could wind up sitting on the market. That’s a big problem, because a property that goes unsold for an extended period of time (e.g., more than 30 days) often becomes stigmatized.
Buyers tend to suspicious when they see a house that’s been on the market for a while. They think that something is wrong with the home. If that’s the case, the seller may have to make a significant number reduction—sometimes dropping the number below market value—in order to nab a buyer.
Pricing your home below market value in an attempt to stir up interest and generate multiple bids can also backfire. Granted, that strategy could work in a hot seller's market, but under pricing your home frequently leads buyers to assume that your home is worth only its list price.
Your best bet: Know what your home is worth, and list your home close to that figure—aka its market value.
When in doubt, turn to your real estate agent to help you cut through the haze and help you pinpoint the right price. We are here for you! :)