How to Determine Home Value and Why It Matters?
Millions of people dream of owning their own homes. And others have successfully purchased homes and seen their investment grow in value each year. But for many, the process is almost as mysterious as the world of stocks and shares. And these days, it seems so complicated that it can scare off all but the most determined.
Several factors come into play when determining a home’s value, including the house’s location, the property’s condition, and how desirable it is compared to other homes in the area. Finding the right price for your home can be confusing. The good thing is you don’t have to do it alone. Melbourne Property Valuers Metro is here to help. Read on to learn how to determine home value and why it matters.
Know Your Neighborhood
If you’re trying to determine the value of your home, you need to know your neighborhood. The last thing you want is to mistakenly overprice a fixer-upper as a luxury mansion or vice versa.
Is it urban or suburban? Once you know that, you can start assessing comparable homes. For example, if you’ve got a single-family home in a quiet suburb, look at other similar homes in your town. If you have an urban loft, check out the value of other apartments and condos near yours.
Use a Home Valuation Tool
The best home value estimator tools (such as Zillow, Trulia, and Redfin) estimate a home’s value based on recent similar sales. Some online calculators use a proprietary algorithm, while others apply a percentage increase or decrease to the area’s most recently sold comparable property. The majority get based on public record data.
For you to get the best estimate of your home’s value, it is recommended that you use a combination of these tools. All the tools provide reasonable estimates depending on the area and time of year you sell your house.
Use Comparative Market Analysis
Determining the value of a home is what a comparative market analysis (CMA) gets used for. It’s how agents decide what to list in your house and how to price it competitively against similar homes in the area. It also gives you a good idea of what to expect from your investment.
A CMA will take into account some of the following factors:
- Location: The neighborhood, proximity to good schools, parks, public transit, etc., are all significant factors in determining what the home is worth.
- Size: How many square feet does the house have? How many bedrooms and bathrooms?
- Features: Does it have top-notch appliances? A swimming pool? An open floor plan? Granite countertops? These can all add value to your home.
- Condition: Is it move-in ready, or does it need some work?
Use the Housing Index Calculator
A calculator is an easy-to-use tool it uses the FHFA HPI to compare changes in home values over time. The calculator shows you how much home prices have changed in your area over time and relative to income growth.
It’s important to know what homes are worth in your area because they can affect how much you pay for a mortgage, insurance, and taxes. The FHFA HPI also allows you to see how much home prices increase or decrease in your neighborhood. The calculator can indicate if it’s worth buying a house today or if it is better to wait until later.
Why It Matters
It’s always a good idea to know the worth of your property, whether you’re thinking about selling it or not. Here are some of the reasons why.
- If you’re thinking of selling, having a clear idea of what your house is worth will help you set a fair price. You don’t want to list it too high or too low.
- Even if you aren’t thinking of selling yet, knowing your home’s value can be helpful for financial planning—such as deciding whether it makes more sense to renovate or buy a new home or deciding whether moving makes more sense than staying put.
- The value of your home can impact, from how much you pay in property taxes to how much you should budget for maintenance and upkeep.
Real estate is intimidating whether you’re a first-time buyer about to purchase your first home or a seasoned real estate investor in business for years. A home evaluation is an arduous task that requires patience and diligence. This market study includes researching various sources, making calculated decisions based on those numbers, and implementing a strategy that allows the homeowner to stay up to date on potential changes and utilize their property as they please.