Whether you are considering selling your home, want to refinance to take advantage of lower interest rates, or want to know how much equity has accrued in order to borrow against it for a renovation or for personal expenses beyond the home, it can help to know market trends.
Even more important than knowing market trends and what other homes sold for is obtaining an accurate valuation of your own home. Be advised that the process of getting a home valuation is complex and includes a lot of details that combine to play a role in determining how much your home is worth.
There are a handful of ways to get a home valuation estimate. This FAQ sheet and our expert, Desiree Carroll, a top agent who sells 10% more quickly than the average Bethlehem, Pennsylvania, agent, will guide you through the ups and downs of acquiring an accurate home value estimate and explain what makes property values fluctuate. We’ll also give it to you straight about online valuation tools.
1. How can I estimate the value of my home?
There’s more than one way to determine the value of your home. Some of the best and easiest include:
- Use an online valuation tool, such as HomeLight’s Home Value Estimator (HVE), or Automated Valuation Model (AVM)
- Talk to an experienced real estate agent
- Request a professional appraisal
- Check public records
Your choice will be contingent on your reasons for wanting a home valuation.
- If you just want a rough estimate for your own personal knowledge, using an online valuation tool to get a free home appraisal should suffice. However, if your goals include refinance or sale, home valuation tools typically don’t have enough data to provide an accurate valuation.
- If you’re considering accessing your home’s equity in a home equity line of credit or a cash-out refinance, your lender will typically require a third-party appraisal, which can cost several hundred dollars or more.
- If you’re considering selling your home, consulting a real estate agent is an affordable choice because most real estate agents will provide a comparative market analysis (CMA) as part of their services.
2. How does HomeLight’s online home value estimator work?
Online calculation tools use information you provide about your home, along with information collected from public records, to calculate an estimated value of the property. Pretty much all online valuation tools have limitations. Although they rely on hard data, rarely do they factor in your home’s conditions, upgrades, or additions.
It’s not an appraisal. However, HomeLight’s home value estimator has some unique strengths that make it stand out from other online valuation tools. For example, in addition to using information from multiple sources to create a real-time home value estimate based on current market trends, HomeLight’s HVE includes a short questionnaire to gather specific information about your home’s property type and condition to give a more personalized valuation.
We also include a list of top local agents who have a verifiable track record of selling homes for the most amount of money. These agents are knowledgeable in home pricing.
Our valuation also includes the Simple Sale price. With Simple Sale, you can request an all-cash offer to buy your home that, if you accept, lets you pick the move date and get your home sold fast without the hassle of making repairs and buyers coming into your home. We estimate a home’s Simple Sale offer price to be around 90% of market value.
Find out what your home might be worth in two minutes and connect with a top agent with HomeLight’s Home Value Estimator. Whether your journey ends with learning your home’s ballpark value or this information is merely the first step on a path toward refinancing or selling your home, this is a great starting point.
3. Should I pay for a professional appraisal?
“An appraisal provides the most accurate valuation,” Carroll says. The caveat is that it is one person’s opinion at one moment in time. The appraised value can be very different three to six months later since an appraisal is largely based on what has recently sold in the area.
If you’re considering refinancing your home or are interested in a home equity line of credit (HELOC), your lender will typically require an appraisal performed by an independent third party. Prices for a professional appraisal vary by region, with appraisals in the Pacific Northwest usually commanding higher prices than in the South. Thankfully, however, the Dodd-Frank financial reform from 2010 dictates that a professional appraiser’s fees must be reasonable and customary for the geographic market.
4. Can I get a home valuation from an agent if I’m not selling my home right now?
Most real estate agents provide you with a comparative market analysis (CMA) as part of their listing services. A thorough CMA – which often exceeds 30 pages of detailed examination – is a tool that should provide a professional valuation of your home and put it in context with comparable properties in the neighborhood (known as comps) as well as the current market.
Some agents charge $100 to $200 for compiling a CMA. Many charge nothing.
“I don’t get paid for a CMA,” Carroll states. She considers it part of relationship building. In an industry based on referrals and client relations, she likes to help past clients in the hope of future business. “Not everything we do is compensated.”
Some states don’t allow real estate agents to get paid for creating a CMA. “You would have to be an appraiser if you’re paid.” Her brokerage (as well as some states) doesn’t even permit their agents to be paid for a Broker Price Opinion (BPO) in which a real estate broker offers a written estimate on a home’s valuation based on expert judgment.
5. What factors impact appraised home value?
Factors that you cannot change
- Location – The neighborhood, the street, the school district, the view — all these factors impact your home’s desirability, but there’s not a darned thing you can do about them. According to the University of Washington’s research, homes adjacent to nature parks and open spaces have an 8%-20% higher value than comparable properties. Data from the National Association of Realtors (NAR) reveals that 26% of recent homebuyers were influenced by the quality of their school district when looking for a new home.
- Supply and demand – Inventory fluctuates according to market conditions and the law of supply and demand. When supply is low and demand is high, your home’s value will increase. Conversely, when supply is plentiful and demand is low, your home’s value will decrease.
- Age of home – Everything ages. You can’t change when your house was built. In some cases, an older home can be worth more, due to architectural details lacking in new construction. Condition is often more important than age.
- Real estate comps – Comparable sales mirror the current market and are historical facts. But because most real estate agents prefer comps no older than six months, it’s a moving target, and as the market fluctuates, so, too, do the comps, reflecting on your home’s value at any given time.
Factors that you can change
- Size and livable space of your home – You can build an addition or refinish your basement or attic to add more square footage of livable space to your home … and add more value at the same time. Be aware that basement square footage doesn’t add as much value as above-ground spaces and may not be included in your home’s overall square footage. Adding an accessory dwelling unit (ADU) or mother-in-law suite may increase the value of a home by as much as 38%.
- Condition of your home – The better condition your home is in, the better it will appraise. Home appraisers rate your home’s condition based on the amount and degree of repairs required. However, due to limited supply and peak demand, Carroll says condition is not as “prevalent” as it was five or six years ago.
- Upgrades and updates – The right upgrades, updates, and remodeling can improve your home’s value. For example, well-landscaped homes are worth 1%-10% more. According to HomeLight’s Top Agent Insight Q2 2020, new stainless steel appliances add an average of $5,982 in value. Even minor updates like new fixtures and paint can add to your home’s value.
6. Does a messy house affect an appraisal?
Technically, décor, moveable items, and cleanliness aren’t supposed to impact an appraiser’s assessment of your home. Human nature, however, intervenes. Messy, dirty, or cluttered homes can impart an “I don’t care” attitude and lead an appraiser to wonder if the home has been properly maintained.
Cases of extreme clutter can hinder an appraiser’s access, affecting the appraisal results negatively.
But it all depends on the market, Carroll says. In a seller’s market, it’s not as important as it is in a buyer’s market.
If I list a home for $300,000 that sells for $320,000, the comp has just gone up, even if the home appraised at only $275,000.
- Desiree Carroll Real Estate AgentCloseDesiree Carroll Real Estate Agent at Keller Williams Real Estate Currently accepting new clients
- Years of Experience 15
- Transactions 211
- Average Price Point $269k
- Single Family Homes 130
7. What makes property values go up or down in any given time period?
As mentioned, property values fluctuate over time. There are several reasons for this, including:
- Zoning regulations – Zoning regulations are municipal laws defining permitted uses for each area. Typical zoning use is divided by residential, commercial, agricultural, and industrial, but can also be mixed. In addition, zoning ordinances can limit building height, restrict sound, and impose many other regulations, including home density. Zoning restrictions can impact a buyer’s decision.
- Interest rates – The rates borrowers pay to finance a home loan rise and fall. When interest rates fall, buyers are able to borrow more money and home prices also tend to rise. When interest rates rise, buying power decreases and home prices typically slow their growth or fall.
- The economy – The general health of the economy affects real estate value. The economy is measured by economic indicators such as the GDP, employment data, manufacturing activity, and the price of goods. Typically, when the economy is slow, the real estate market is, as well, causing home values to drop, while economic growth boosts home values.
- Supply chain and material costs – The rising cost and limited supply of lumber, steel, aluminum, and other construction materials have driven up housing costs.
- Politics – Politics can impact the economy, particularly if the government stimulates the consumer climate. This could be in the form of legislative action to lower interest rates or tax incentives. Sometimes the political leanings of a geographic region can impact the value of real estate.
- Disasters – Whether natural, like a hurricane or tornado, or man-made, like many fires, disasters can impact the value of the unaffected properties as a result of a decrease in supply and an increase in demand from displaced homeowners. Additionally, some sellers make improvements to their home after a disaster, which can increase their home’s value.
- Bidding wars – When demand exceeds supply, buyers may bid higher than list price in order to win the property. “If I list a home for $300,000 that sells for $320,000, the comp has just gone up,” Carroll explains, “even if the home appraised at only $275,000.”
8. Are home appraisals public record?
In general, home appraisals are not public record. However, some portions of an FHA appraisal are released to an FHA website and may be accessed for up to six months.
In many states, public records will reveal limited information, such as recent sales prices, number of beds and baths, and square footage. However, there are a handful of non-disclosure states in which no information is made public. In non-disclosure states, sale prices in a real estate transaction are not disclosed or recorded as public record, whether to protect the homeowner’s privacy or the value of the industry’s multiple listing service (MLS).
However, the National Association of Realtors explains on its website that non-disclosure states “cannot withhold sold data from MLS data feeds.” The restrictions on disclosing this data relate only to public display of information.
When it’s difficult to assess a home’s value with anything but an appraisal, it usually leads to under-valued homes.
9. What will my house be worth in 5 years?
Carroll likes to say that you never lose in real estate if you hold onto property long term. Depending on your goals, however, you could lose money if you buy or sell at the wrong time.
Being able to predict your home’s value in five years can help you plan. You can start by consulting the Federal Housing Finance Agency FHFA HPI Calculator to get an idea of what a home previously purchased would sell for today. It takes into consideration the average rate of appreciation of all homes in the area.
The easy-to-use calculator asks you to input your state, the quarter and year that you purchased the property, the quarter and year you’re planning to sell, and the original purchase price. It then calculates how your home’s value has increased over the timeframe by referencing appreciation trends for the area.
It’s a ballpark figure. For a truly accurate assessment, ask an experienced agent to provide an opinion that takes into consideration specifics about your property and developments in the neighborhood.
10. What will my house be worth in 10 years?
Historically, median home values have seen a steady price growth increase at a 25-year average of 3.9%, according to data from the U.S. Census Bureau on home prices that dates back to the 1960s or earlier in some areas.
Carroll mentions what real estate agents refer to as a “seven-to-ten-year swing” in market fluctuations that see home values rise and fall accordingly. “I’ve talked to economists; the predictions have been accurate.”
Until now. The U.S. housing market has exceeded the ten-year upswing – due, in part to the COVID effect and its ripples in the supply chain. “Once the pandemic hit,” Carroll recalls, “we thought it was [the beginning of] the downturn. But it didn’t happen.”
Although the market has been on an upswing for a long time, Carroll reminds us that it will eventually take a downturn. She advises clients to “strategically think of where you want to be” and try to gauge the market’s future.
Looking at the general trend of America’s home price history can help predict potential trends 10 years in the future. However, even this extensive historical data cannot account for unexpected dips and surges in the market such as we’re currently experiencing.
Bottom line – the best equation to estimate the value of your home
Whether you’re simply curious about your home valuation or you have a more urgent need to know – such as the desire to refinance or apply for a home equity loan, concern about property tax assessment, estate planning or settlement, or you’re going through a divorce – you can get a rough idea by using an online valuation tool. Remember that AVMs don’t consider upgrades or improvements to your home or neighborhood, which diminishes their accuracy.
HomeLight’s home value estimator can be your convenient starting point for a free valuation. For a better idea of your home’s value, HomeLight’s HVE can direct you to a local top real estate agent, who can provide an even better estimate by preparing a CMA that presents a pretty accurate snapshot of your home’s value.
You can try to do the legwork yourself by consulting public records, but an experienced agent will have more knowledge about the neighborhood and properties in general, not to mention greater access to other sources of information, such as the MLS.
For the most accurate estimate of your home’s value, order an appraisal. An independent professional appraiser can provide the most precise evaluation of what your home is worth.
Header Image Source: (Jonnelle Yankovich / Unsplash)
- "About Automated Valuation Models (AVMs)," CoreLogic (2017)
- "H.R.4173 - Dodd-Frank Wall Street Reform and Consumer Protection Act," 111th Congress, Congress.gov (July 2010)
- "What is broker price opinion?" Fannie Mae (June 2022)
- "Home Buyers and Sellers Generational Trends," National Association of Realtors® (2022)
- "Historical Census of Housing Tables: Home Values," United States Census Bureau (October 2021)