How to Compare House Prices to Nail Down Your Home’s Value

The increase in housing prices since 2020 has prompted many homeowners to wonder about the value of their own, especially as they compare house prices in their local area. Real estate agent insights for 2023 see a more balanced market than in 2020-2022, but don’t see it as exactly a buyer’s paradise.

While some markets that saw particularly steep gains will see the biggest drops, predict agents surveyed by HomeLight, even some decline in home prices through 2023 will not be enough to erase the gains of earlier years.

So with all these changes, how do you figure out the value of your home? If you’re considering selling, getting it right means not leaving money on the table if you price too low or having your house sit on the market if you price too high. Real estate agents are experts at price setting. Agents perform a comparative market analysis — comparing similar properties that have sold nearby — to arrive at a listing price.

We’ll take you through options that will help you compare house prices to better understand your home’s value.

How to compare house prices in 5 steps

Whether you’re selling your home on your own (FSBO) or doing some pre-listing research, it’s essential to know how to compare house prices. Here are five ways you can compare house prices in your area.

1. Use an automated valuation model (AVM)

AVMs use data about your home and about the surrounding market to estimate home value. They are great for providing quick insight into your home value, but we recommend working with a top agent if you are selling, since an agent will know how to factor in aspects of your home that an AVM doesn’t see. This makes AVMs a great way to begin your research, but they aren’t going to be able to factor in things like recent upgrades and location factors.

HomeLight’s free home value estimator is an excellent place to begin your research. The calculator scours millions of public real estate transactions to predict how much your home is worth. First, you’ll need to answer a few questions about the property’s condition, age, etc. Then, you’ll receive a detailed analysis of your property.

Get an Estimate on Your Home's Value

Our Home Value Estimator is a great starting point. Working with a top real estate agent is the next step to pricing your home and understanding your options. Local real estate agents can physically view the property, they list homes like yours every day, they know the neighborhoods, they know what’s trending, and they can call out unique characteristics on the property.

Get Estimate

2. Perform a comparative market analysis (CMA)

“You have to compare apples to apples. So if I’m looking at a single-level property, I make sure that the other homes that are in my comparative market analysis are also single-level,” says Mary Jo Santistevan, a top-performing real estate agent in Phoenix, Arizona.

An AVM is a good starting point, but a CMA is a much more comprehensive analysis that can amount to 30+ pages of data. A CMA can also incorporate information not found in the data scanned by AVMs, such as whether the home has been recently upgraded. When you’re choosing which properties to use for comparison, you’ll want to choose properties that are similar in:

• The number of bedrooms (if an exact match isn’t possible, choose a home that has one more or less a bedroom)
• The number of bathrooms
• Square-footage of the interior, as well as similar lot size (“Home appraisers usually stay with 10% to 20% [when comparing other homes to yours],” says Santistevan.)
• Year the home was built (choose homes within a five-year range to find homes most similar to yours)
• Condition (maintenance of the functional systems and overall condition of the home)
• Updates (modern kitchen upgrades, central air, recessed lighting, type of flooring, etc.)
• Structure and style (split-level, versus two-story, versus ranch)

Note: Properties with added amenities or cosmetic updates can be used in your comparison, but be mindful that you’ll need to adjust the price accordingly.

3. Stay in the neighborhood

The properties you want to use when you compare home prices should be within the same neighborhood — the closer the comps are to you, the better. “If you go across a busy street, a set of railroad tracks, a creek — everything can change,” says Carl Medford, a top-selling real estate agent in Fremont, California.

You can use online marketplaces to search for homes that have sold recently. To do this, follow these steps:

• Type in your city or address to get more specific results.
• Use the filters to adjust the results to:
  • Recently sold listings only
  • Your home’s specifications
  • Choose “sold in last six months”

As you’re reviewing the sold listings, look at properties similar to yours and what’s nearby, too. Ideally, the comps you’re using should be within the same proximity to shopping, restaurants, schools, hospitals, public transportation, etc.

Unfortunately, you will also need to consider external factors when analyzing comps. For example, property values can decrease if:

• They’re near loud facilities (airports, busy roads, train tracks, military bases).
• They’re near safety threats (toxic waste facilities, shooting ranges, registered offenders).
• The school district is less than desirable.
• There are negative billboards or storefronts nearby.
• The neighbors are noisy, disruptive, or their property is in bad shape.

4. Keep track of trends

Local real estate market trends are constantly changing, and when you’re selling, you have to stay up to date with the comparable homes in your area. Market factors you need to be aware of include:

• Market inventory to see how many homes are on the market at any given time. The fewer available homes similar to yours, the better it is for you.
• Days on the market will give you insight into how long it’ll take a home to sell. This is important because it’ll help you determine if homes like yours are in-demand or not.
• Interest rates will give you an idea of how many buyers are actively in the market. When rates are low, the buyer pool will be more robust, but when the rates are high, buyer demand will wane, and it may be more challenging to sell your property. You can check Freddie Mac’s Primary Market Mortgage Survey for the latest interest rates.

5. Hire a real estate agent

Learning how to compare house prices can take experience, but it can be overwhelming if you’re in a saturated market and homes are selling faster than hotcakes. There’s so much data to review, analyze, and track! Fortunately, when you’re working with a real estate agent, they do everything for you. The agent you hire should know the market like the back of their hand, and finding comps is second nature. They know how to compare house prices, and they can recommend a listing price that is competitive and accurate.

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