Why You Should Know the Value of Your Home — and How to Calculate It

how much is my house worth

For every homebuyer wondering how much house you can afford, there’s a homeowner asking a very different question: “How much is my house worth?”

An online home value estimator can get you closer to an answer. But finding a worthwhile home value estimate requires more effort than clicking around websites.

Who needs a home value estimate?

A millennial inheriting a five-bedroom might be the prime audience for free home value estimators. You would want to know exactly what you just came into.

More likely, knowing the value of your home could help clarify your property tax burden or your home insurance premiums.

Your property tax, for example, is based in part on the assessed value of the property, which is typically 80 to 90 percent of its market value. If your property hasn’t been valued by your county’s assessor’s office for years, you could be paying too much (or too little) tax on it.

As far as insurance goes, if you choose to insure your home based on its market value (not its replacement cost), that perceived value will affect your premium.

There are plenty of other reasons you might want to know the value of your home, including the most obvious: You’re either considering or preparing to sell it. Other possible reasons could be that you’re:

Start with home value estimators

Zillow started the rush on home value estimators in 2006, seeking to answer the question of how much your house is worth. Its home valuation tool combines public data with user-submitted information about homes.

Beyond that, it’s not rocket science. The value of your home will be affected by the recent sale price of similar homes nearby. The tool compares your home to others based on factors like the number of bedrooms and bathrooms and square footage. Unless your home is an oddity, there should be a comparable home nearby for comparison.

The tools work intuitively. You type in your address (or someone else’s) to receive a snapshot of the home’s value. Here’s what I found when entering an address in a nice California Bay Area neighborhood:

home value estimator

Image credit: Zillow.com

You’ll also see facts and figures, like the last sale of the property and the year it was built. If you’re the homeowner, you’ll have the option of updating the page’s information. Crowdsourcing improves the estimate of your listing and the properties near it.

But they’re not full-proof. Zillow, for example, estimates that only about half of its Zestimates for Seattle properties are within 5.4 percent of the home’s final sale price.

The value of the four-bedroom Bay Area house varies depending on where you enter the address:

As a service, many of these websites offering a home value estimator also offer to connect you with a real estate agent to further your research. Whether you take them up on this offer, remember that these estimators are merely a starting point.

Fill in the blanks with professional help

You could use home value estimators to also research comparable home sales in your area. You might even check with your city or county assessor and property records offices to pull sale prices of your neighbors’ houses.

With just a few clicks, for example, I was able to see how much my landlord paid for the New York City building where I rent an apartment. The city’s department of finance has a nifty search tool.

When it comes to finding the market value of your home, however, you’ll likely need professional help to advance in the process.

Working with appraisers and real estate agents

If you don’t want to attract the attention of a realtor, you might consider hiring a licensed appraiser to visit your home and give you an estimate. Appraisers are trained to estimate your home’s value by looking at the condition of the home, not how it’s decorated.

Unlike a real estate agent motivated by a commission, an appraiser would be more likely to give you an objective estimate. They typically charge an appraisal fee of between $225 and $450, according to HomeAdvisor.

You can find an appraiser using the directory tools over at the Appraisal Institute or the American Society of Appraisers.

If a sale might be in your future, it’s worth meeting with multiple realtors. Just as you might seek a second and third doctor’s opinion before undergoing surgery, due diligence could help you find a real estate agent that you can trust.

Agents can be good sources of useful statistics. Ask your agent candidates for a comparative market analysis of your home. A superior agent should have access to private property data that you won’t have access to on your own.

Just remember to push your agent to find your home value estimate, not necessarily its potential sale price. If you’re not ready to sell, knowing its value now can help inform your decisions down the road.

Home value estimates fluctuate

“How much is my house worth?” is a complicated question. You’re unlikely to find the best answer with a few clicks of your mouse or taps on your phone.

You’re more likely to need some additional research and professional help. After all, home values change, and these changes are not always predictable.

The value of your home won’t hold steady thanks to factors like your property’s (needed) renovations, the quality of the nearest downtown area, and your neighborhood. So you should always try to stay in the know if you want a good answer to your question.

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