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Homeowners: Know What a House is Worth

Owning a house is a major financial undertaking. And, over years of ownership, every mortgage payment made, allows to own increasingly more of the home’s value. However, the housing market can shift at any moment, and so will the value of the house.

A home can rise or decrease in value over time. When the local neighbourhood isn’t closely associated with the home values, it’s unsure the home is worth more or less than when it was purchased. This knowledge may have an effect on important decisions such as the ability to sell the home or make money out of its total value.

If wondering how to assess the home’s financial worth, here are a few steps to take.

Hire a Professional Appraiser

A great way to get a reliable appraisal to assess how much the home is worth through a professional appraiser, through a home valuation.

Usually, appraisals are required when taking out a mortgage to purchase a home¹. As a property owner, it’s possible to obtain an appraisal with a professional at any time. 

Appraisers will advise the house’s present market value. According to NerdWallet, appraisers visit the home and assessing all the factors impacting its financial value, including:

  • The market the home is in – region, city, and neighborhood.
  • The property’s features, including any improvements or additions that were made.
  • Comparable properties that are available for purchase, vacant, or otherwise available.

Once this appraisal is complete, the appraiser will give a total value for the home in an official report.


Get a Comparative Market Analysis

A Competitive Market Analysis (CMA) is a fantastic choice if a more in-depth evaluation of what the home is worth is needed. Local real estate agents are permitted to perform a CMA for any homeowner.

Similar to an appraisal, a CMA needs an inspection and evaluation of the home by a specialist. Factors used in a Comparative Market Study include a price comparison, a valuation estimate, specifics of the home and property, and comparable homes that have recently been sold — or have not been sold³.

Any real estate agent can provide a CMA. Most will give a CMA without charge, while others can charge a small fee. Sometimes, real estate agents will send CMAs to homeowners in hopes to hire them to list and sell their house.


Use the House Price Index Calculator

A fast way to get an estimate of the value of the home is by using the house price index (HPI) calculator of the Federal Housing Financing Agency (FHFA).

The FHFA’s HPI calculator is a handy tool that will help  get a better idea of what the home might sell for. According to the FHFA, the HPI calculator uses what’s called the repeat sales method to determine a home’s worth⁴. This  means the future value of the house is based on years of past mortgage purchases and home sales. The HPI calculator will use FHFA data on how much the home was priced when it was previously sold, then take into consideration the current housing market.

The HPI calculator has a few drawbacks, so bear in mind that it does not provide the most accurate value for the home. This looks just at other mortgages, and does not adapt to inflation. But in seconds it can give a fast estimate, and can also show trends in appreciation and the valuation of the house.

Get an Estimate Online

Going online is a quick and simple way to get an estimate of the value of the house. An online search will give countless calculators and home-value estimators. And with homeowners, those online options are becoming very popular. NerdWallet estimates that online estimators are used by 22% of homeowners to calculate the worth of their home.

Online home value calculators or estimators, also known as automated valuation models (AVM), can estimate the value of the house. With the use of public documents, such as transfers of land, tax assessments and recent home sales or local listings in the area. We often rely on statistical estimation methods to make calculations that are as reliable as possible, based on all the details available.

An AVM calculator can easily be found online. They’re provided by several real estate applications, including Zillow and Redfin. Certain choices can also be found via an online search. WeBuyHouses.com, FastHomeOffer.com and Homevestors.com should also be taken into consideration.

It is necessary to bear in mind that the value of a home will change regularly. As local markets shift and comparable homes are selling, the value of homes rise. And if intended to sell or refinance, be sure to be on top of the value of the house. It’s a great way to make an educated decision on the cash value the house could hold.

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