How Much Is My Home Worth?

Your home is an asset. Know how to find its value.

From the moment you sign on the dotted line, your home becomes perhaps your most important investment. As you spend time and money updating and maintaining your home, its value should grow. Know that value can help as you make future decisions about your primary investment, whether it's selling, refinancing your mortgage, or borrowing money to remodel.

Key Takeaways

  • Numerous factors go toward determining a house's value, including location and current market conditions.
  • Generally, you'll want to spend at least a few years in a home before selling so you can maximize your investment.
  • While plenty of tools to estimate your house's worth are online, a home's actual value can be determined by a real estate agent, a county or municipal auditor, or a licensed appraiser.

How Much Is My House Worth?

If you were to list your home for sale, you would need to know what price to put on the property. To accomplish that, you or a team of trained professionals must wrestle with complicated variables that can increase or decrease a home's value. To do that, you'll likely rely on one of the three following valuation methods:

  • Appraised value: Licensed appraisers help determine a home's worth. They take into account different variables like the size of your home and upgrades and come up with a price. You see this type of valuation when someone is either looking to obtain or refinance a mortgage.
  • Assessed value: When a property is assessed, it's typically done by the local county tax assessor. The assessed value of a home is used to determine how much money the homeowner will have to pay in local, county, and state taxes. This method compares your home to other nearby homes and their valuation, as well as its overall location within the community, how big your home is, and what upgrades you've done, among other things.
  • Fair market value: This valuation method compares your home to nearby properties that are similar to yours, based on things like square footage, number of bedrooms, and general location.

Factors That Determine a Home's Value

A range of factors will raise or lower your home's market value, and many of them are out of your control. These are things like neighborhood safety, schools, surrounding homes, and other factors of the environment. As you know from your own home-shopping experience, these are of high importance to buyers.

Location, school system, convenience

The old adage rings true—it's all about location, location, location. Where your home sits may have the biggest impact on your home's value. Homes in noisy, run-down neighborhoods sell for less than those in peaceful, well-kept parts of town. Prospective homeowners look for things like good school districts, public transit, nearby shopping and entertainment options, and if they aren't relocating for a job, they want employment opportunities.

Past home sales in the surrounding area

Another factor is the recent prices that nearby homes are fetching. Typically, you would try to find houses that more closely resemble your own. Defining features like the number of bedrooms and bathrooms can help whittle down the number of potential matches, leaving you with a more accurate look into how similar houses sold on the market.

Home characteristics

A home's size and amount of actual usable space within it are huge drivers towards a big valuation. Prices are estimated in terms of square footage. Be sure to you have a good understanding of livable or usable square feet because it may or may not include things like basements and patios.

Age plays a role in a house's value. As buildings get older, they become less structurally sound without significant effort to keep them standing. Similarly, if a home has aging electrical and plumbing systems running on the inside, that's going to immediately be less attractive to a prospective buyer than a similarly sized home with all new features.

Upgrades you've made to your home

Maybe you've added solar panels, on-site electric car plug-in, and fully automated lawn sprinkler systems. Perhaps you've invested in things like efficient heating and air conditioning, the latest home security system, and energy-saving windows. These add value to your home and make it stand out when compared with other homes for sale.

The current market

The housing market, massaged and tweaked by factors ranging from labor to interest rates, helps establish the price for your home. If homes outnumber buyers, then a so-called buyer's market will keep prices down. Conversely, buyers outnumbering homes boosts demand and creates a seller's market that favors the homeowner. By paying attention to how the market's moving, you can determine the best time to sell.

How Long Should You Live in a House Before Selling?

Homeownership has long been considered a great investment, especially for young couples and families starting out. Not only is having a home beneficial for your overall health and well-being, but it will begin building equity over time. Though there are inherent risks involved with any investment, homes typically appreciate as the years go by. With the housing market and real estate prices operating in a cyclical manner, there are bound to be some booms and busts along the way, but the general consensus is the longer you stay in a home, the more profit you'll be able to extract out of it once you do decide to sell.

Though there's no hard and fast rule for how long you should live in a home before selling, you should consider how much you paid for the house, along with any additional costs like closing fees, real estate agent fees, and mortgage interest fees. Depending on those costs, you may want to stick with the house you bought for at least five years before re-entering the housing market.

Can You Personally Check Your Home's Value Online?

Numerous online tools allow you to get a rough estimate of your home's worth. These tools rely on public data to determine a home's worth. Different sites will provide different estimates, so the values they return should be considered as rough guidelines. Zillow, Realtor.com, Trulia, and Redfin are among the most popular online options.

Can Mortgage Interest Rates Impact a Home's Value?

Mortgage interest rates will affect a home's sale value. Lower rates mean less money to pay down a mortgage and more to spend on a home, with overall better prices for homes. Sellers should expect less for a home if buyers in a high-rate environment are spending more on their mortgage.

How Much Does It Cost to Get a Home Appraised?

The cost of a home appraisal depends on multiple factors from the size of the home in question to the property's location. Appraisals typically cost anywhere from $300 to $400, though they can go as high as $800 or more depending on the size and location of your home.

The Bottom Line

Your home is an important investment. While housing is one of the few investments that consistently appreciates over time, external factors can have an impact on your home's value. Like any investment, it's imperative that you keep tabs on its market value—especially when you plan to sell.

Article Sources

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  1. Habitat for Humanity. "The Health Benefits of Home Ownership."

  2. Zillow. “Zillow: Find it. Tour it. Own it.

  3. Realtor.com. “To Each Their Home” 

  4. Trulia. “Trulia: Discover a place you'll love to live

  5. Redfin. “Redfin: Find homes first. Tour homes fast."