Home property values have been on a rollercoaster ride the last couple of years, especially due to Covid. Last year was an all-time high for real estate prices due to less properties being available on the market and record low mortgage rates. But this year, mortgage rates are creeping back up and property values are all over the place. So what is your home really worth?
There are those that say that property is a buyer’s market, and your home is only worth how much a person will shell out for it. That’s a short answer to a much longer, complex problem. Truthfully, it’s also not an answer that you’ll be able to find in an article on the internet. You’ll be pointed in the right direction if you continue reading though.
In the age of the internet, there are now online tools to assist with evaluating your house along with finding expert advice that you need. Before you decide to do anything like selling or even refinancing your property, you want to be armed with the right information.
Here are important things to consider in order to find out the value of your home:
House Price Index Calculator
If you have an internet connection, you can use the Federal Financing Agency House Price Index calculator.
It’s a convenient resource that you can use from the comfort of your own home. You don’t have to call anyone, or set up a meeting to show someone your property. Just a few clicks and some forms, and you’ll have information at your fingertips.
By tracking changes in house values between sales, it can apply the same differences to your property. It’ll take the value of when it was last sold, and then crunch numbers based on the current housing market.
As you might suspect for an easy to use tool, the HPI isn’t perfect. While it has access to a vast list of mortgage transactions to make its evaluation, it can’t take into consideration things like how up-to-date your bathroom is. It also isn’t good at adjusting for inflation. That being said, it’s great for a quick estimate to get you on the right path.
Speak With an Appraiser
Of course, the most obvious way of finding out the value of your property is to hire an expert. In order to become legally certified as an Appraiser, a person has to go through many hours of coursework, exams, and on-site work as a trainee. That means when you hire a certified appraiser, you can be assured that they know their stuff.
Whenever you get a mortgage, financial institutions always want an appraisal before they approve you for a loan. Someone who is hired to get that information will accomplish this through several key factors.
The location of your home such as the neighborhood or city plays a big part in your value. Any features you have like updated bathrooms or having an open layout is taken into consideration as well. Any similar properties that have recently sold is another great data point. All of this is gathered into an appraisal report, which will be able to tell you how much your home is worth in total.
Competitive Market Analysis
Also known as a CMA, a Competitive Market Analysis is another process you can undertake. Unlike a home appraisal, a CMA is performed by a real estate agent instead of an appraiser. In many cases, an agent will perform one for free when they are trying to sell your home.
Realtors have full access to something called the multiple listing service, or MLS. By using this information, they will be able to compare your property to similar ones to get a good idea of its worth.
The biggest difference between a CMA and an appraisal is the application. Because an appraisal is done by a bank for financing purposes, they tend to be on the conservative side. Meanwhile, a CMA is performed when you want to sell your property, so will be more aggressive in order to get you max value. At the end of the day, both are valuable tools in order to determine your home’s worth.
The aforementioned HPI calculator isn’t the only website you can use. There are many automated valuation models (AVMs) online that can estimate your property’s value. They aren’t hard to find either, as most real estate websites like Zillow will have them.
Since internet access is common these days, this is how many Americans choose to find out their home value. It’s estimated that around a quarter of homeowners in the USA use this method to get the relevant data.
Having several options is good too. If different calculators are all arriving to the same evaluation, then you’ll have a better idea of your true property value. Remember that the most important thing when doing anything financial related is knowledge, and more information is never a bad thing.
Because the property market can be volatile, it is imperative to update yourself on the current value of your own home. This applies whether you are looking to refinance your mortgage, get a new loan, or sell your home.
Whatever the case, having those figures will ensure that you get maximum value out of whatever you are trying to do. As with any other aspect of life, doing your research ahead of time will prevent you from getting the short end of the stick.