Check Your House Value: 7 Reasons It Pays to Know
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Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
As a homeowner, there are good reasons to check your house value, even if you have no immediate plans to sell.
Maybe you’ve noticed home prices in your neighborhood changing, and you’re curious how much equity you have. Or perhaps you’ve made major improvements to your house and are wondering how they might have increased its value.
And if you are thinking about selling, knowing your property’s approximate value can be an important first step toward estimating how much you might walk away with after the sale.
HomeLight’s Home Value Estimator can provide a ballpark estimate based on information about your property and current market data. But an online estimate is only a starting point. We’ll explain when you may want a more detailed opinion of value from a real estate agent or appraiser.
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How much equity have you gained? HomeLight’s tool uses recent sales records, market trends, and your home’s most recent sale price to provide a preliminary value. See what your home might be worth today!
When should you check your house value?
There’s no need to obsess over every fluctuation in your home’s estimated value. But there are times when knowing what your property might be worth can help you make an important financial or selling decision.
Here are seven situations when it’s worth checking.
1. You’re starting to think about selling
If a home sale may be in your future, checking your house value can give you an early sense of what the move might look like financially.
Your estimated value isn’t necessarily your future listing price or final sale price. However, it can help you start thinking about how much equity you have and what you might be able to spend on your next home.
“Finding out the value of your home is the number one factor in deciding when to sell,” says Megan Toll, a top real estate agent with The Toll Group serving the Greater Philadelphia area.
Just don’t let an attractive number become the only reason you sell.
“I think the biggest thing is don’t sell just because your home has value on it,” says Michigan real estate expert Kevin Yoder. “Unless there’s something strategic in that.”
Instead, consider what you hope to accomplish by selling, whether that’s relocating, downsizing, upsizing, or freeing up equity for your next move.
2. You want to estimate what you could make from a sale
Your home’s estimated value and the amount you’d actually pocket from selling it are two very different numbers.
Your potential proceeds will depend on factors such as:
- Your final sale price
- Remaining mortgage balance
- Agent compensation (commission)
- Seller closing costs
- Repairs or home preparation expenses
- Other costs associated with the transaction
That’s why checking your house value can be particularly useful when it’s paired with an estimate of your selling expenses.
Home Sale Net Proceeds Calculator
Use your estimated home value as a starting point to get a rough idea of what you could walk away with after your mortgage and estimated selling costs are deducted.
An experienced real estate agent can provide a more detailed seller’s net sheet based on your home’s likely sale price and anticipated expenses.
3. You want to know how much equity you’ve built
If your home is worth more than you owe on your mortgage, you’ve built equity.
A simple way to estimate it is:
Estimated home value − outstanding mortgage balance = estimated home equity
For example, if your home is worth approximately $500,000 and you owe $300,000 on your mortgage, you have roughly $200,000 in equity.
That doesn’t mean you’d pocket $200,000 from a sale because selling expenses would still need to be deducted. But knowing your equity can help you understand where you stand financially so you can better plan your next move.
Equity can also potentially be borrowed against through options such as a home equity loan or home equity line of credit (HELOC). If that’s what you’re considering, HomeLight’s Home Equity Calculator can help you estimate how much borrowing power you may have.
4. You may be able to remove private mortgage insurance
If you bought your home with a conventional mortgage and put down less than 20%, you may be paying private mortgage insurance (PMI).
Depending on your loan and circumstances, paying down your mortgage may eventually allow you to request PMI cancellation. Some loan programs or servicers may also allow you to demonstrate increased equity through a new valuation if your home has appreciated. Contact your mortgage servicer to find out which requirements apply to you.
Toll encourages homeowners paying PMI to investigate their options rather than simply leaving the charge on autopilot.
“PMI is huge,” she says. “You can save $100, $200, $300 a month by dropping the PMI. It’s a big savings.”
PMI cancellation rules vary depending on factors such as your loan, payment history, and how the equity was accumulated, so contact your mortgage servicer to find out which requirements apply to you.
5. Your property tax assessment seems too high
Your home’s market value (what a buyer would pay for it today) and its assessed value (the figure the local government uses to calculate property taxes) aren’t usually the same number. Still, checking recent home values in your area can help you determine whether your tax assessment appears out of line with comparable properties.
If you believe your home has been over-assessed, your local government may have a process for appealing the assessment. Requirements vary, but you may need supporting evidence such as comparable sales or a professional appraisal.
“Tax planning or compliance are fairly common reasons to check a home’s value,” says Southern California real estate appraiser Mike Ford.
Before appealing, review your local assessor’s procedures and deadlines so you understand what evidence is required.
6. You’ve made major improvements to your home
A remodeled kitchen, finished basement, addition, new roof, or other significant project may affect your home’s marketability and value.
But don’t simply add the amount you spent on renovations to your previous home value.
Some projects produce stronger returns than others, and buyers may place different values on improvements depending on the home and local market.
State-licensed appraiser Warren Boizot III says he has seen homeowners spend heavily on elaborate remodeling projects only to discover that their local market doesn’t value the improvements nearly as highly as they do.
“Sellers are shocked that their $150,000 remodel only yielded $60,000 when they went to sell the property,” Boizot says. “I see this often with basement projects where a homeowner will spend $100,000 to build their beautiful dream ‘man cave’ … only to find that their market simply doesn’t recognize below-grade (basement levels) of a home in the same way they do the above-grade levels of a home.”
Before investing heavily in improvements with resale in mind, ask a knowledgeable local agent which projects buyers in your market are most likely to value.
Checking your home’s value after significant renovations can give you a better idea of where you stand. It’s also a good time to review your homeowners insurance coverage, particularly if you’ve added square footage or made improvements that could affect the cost of rebuilding the property.
Keep records of major renovations, permits, warranties, and upgrades. If you eventually sell, those details can help your agent understand improvements that may not be obvious from public property data.
7. You want to see what buyers may find online
Long before you put up a “For Sale” sign, it can be useful to see what online real estate sites say about your property.
Check basic details such as:
- Square footage
- Number of bedrooms and bathrooms
- Lot size
- Property type
- Previous sales information
Also, look at online home value estimates, but don’t assume they’re definitive.
“Listing sites use algorithms,” Toll says. Those algorithms may consider factors such as square footage, acreage, and the number of bedrooms, “but they don’t know about upgrades.”
That’s an important distinction if you’re preparing to sell. An automated estimate may not recognize your renovated kitchen, new roof, superior condition, or other features that distinguish your property from nearby homes.
If you’re considering listing, a local real estate agent can evaluate those differences and compare your property with homes that have actually sold nearby.
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How to check your house value
How precise your home value estimate needs to be depends on why you’re checking it.
If you’re simply curious, a free online estimate may be enough. If you’re preparing to sell or making a major financial decision, you’ll probably want a more personalized valuation.
Here are three ways to approach it.
Start with an online home value estimate
An automated valuation model, or AVM, uses property and market data to estimate what a home may be worth.
HomeLight’s free Home Value Estimator provides a preliminary estimate based on information about your property and market trends.
Online estimates are convenient, but they’re best treated as a starting point.
Ford cautions that determining whether an automated estimate reflects actual market value “takes further human analysis.”
That’s particularly important when your home has features, renovations, condition differences, or other characteristics an algorithm may not fully capture.
Ask an agent for a comparative market analysis
If you’re thinking about selling your home, the human analysis Ford suggests is typically provided by a real estate agent in a report called a comparative market analysis (CMA).
“Partner with a knowledgeable top agent in your area to conduct a comparative market analysis (CMA),” he advises. “A CMA is a more specific method. It’s not an appraisal, but it’s a pretty good substitute if it was prepared by the agent themselves, based on relevant information.”
The agent will examine recent comparable sales and account for differences between those properties and yours.
“The best place to start is with an agent who understands the comps and the area,” Toll says.
HomeLight’s free Agent Match platform can connect you with top-performing agents in your area who can help you understand your local market and what your home could sell for.
Get an appraisal when you need a professional valuation
Some situations call for a formal appraisal rather than an online estimate or CMA.
A licensed or certified appraiser independently evaluates the property and analyzes relevant market data to develop an opinion of value.
An appraisal may be appropriate when a lender requires one, you’re challenging a property tax assessment, or you otherwise need a documented professional valuation.
“If you want to know what your listing price should be now, talk to an agent,” Toll says.
In other words, sellers don’t generally need to order an appraisal simply to find out what price to put on their home. An experienced local agent can usually provide the market analysis needed to begin planning a sale.
Your home value can help you plan your next move
Checking your house value can satisfy your curiosity, but the number becomes much more useful when you have a reason for knowing it.
Whatever your reason, start with the level of accuracy you actually need. An online home value estimate can provide a quick snapshot, while a local agent can give you a more detailed market perspective if a sale is on the horizon.
As Toll explains, homeowners often become interested in their equity when something in their lives changes.
“Maybe they bought their home three to five years ago when they got married, and now they’re expecting a baby and want to upsize,” he says. “Or they want to relocate to be closer to family.” He adds, “Or maybe they’re just curious.”
Knowing approximately what your home is worth can help turn those possibilities into a more realistic plan.
“Work with an agent with a good track record — someone who understands the market, sells a lot of homes, and has the necessary tools,” Toll advises.
Find more helpful tips in HomeLight’s Seller Resource Center.
Writer Lori Lovely contributed to this post.
Header Image Source: (Imagenet / Deposit Photos)
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