Your house is much more than a home — it’s likely one of the biggest purchases you’ll ever make, with a value that makes up a significant proportion of most people’s net worth. As such, you’ve probably wondered from time to time what your home is worth.
Determining the answer is not as simple as referring back to your sales agreement or mortgage papers. What you paid for your house when you purchased it merely reflects what your house was worth to you — and the real estate market — at a specific point in time.
In reality, housing values are dynamic, and they fluctuate based on a number of factors. Some things, such as keeping your house in good repair, are within your control. Other external influences, such as the market, mortgage rates, and other considerations, can also affect the value of your home.
Here, we’ll take a close look at how this works, and answer questions like:
• How much is my house worth?
• What factors determine my home’s value?
• How can I increase my home’s value?
First, take our “how much is my house worth” quiz to get an overview of what value your home holds.
Next, delve into the topic more deeply with these insights.
Estimating the Value of Your House
Knowing how much your house is worth can improve your money mindset by helping you understand where you are financially. There are a number of ways you can determine the estimated value of your house.
• Online calculators. The easiest and fastest way to answer the question, “How much is my house worth?” is probably to use an online home valuation calculator. These tools provide a ballpark estimate of the value of your home based on your address. Such estimates typically use publicly available information, including average home sale prices in your area, property tax assessment information, market trends, and other data.
• Market dynamics. Once you have a rough estimate of your property’s worth, you can use other cues about the housing market in your area to gain more insight. This might include such factors as sales and mortgage trends, which can give you a sense of whether your property value is likely to increase, decrease, or remain stable. For instance, during times of rising mortgage interest rates, consumer demand might wane as it becomes more expensive to borrow money.
• Professional opinions. A professional appraiser or real estate agent can also help you get a more precise estimate of what your house is worth. An appraiser will consider both the local housing market and the unique characteristics of your property when creating your home appraisal.
Real estate agents, meanwhile, will typically conduct a comparative market analysis (also called a comp or CMA). This is an estimate based on actual data from recently sold homes that are most similar to yours.
If you are looking to sell, you may want to consider getting a comparative market analysis from several different real estate agents to help you assess their knowledge of and viewpoint on the local market before you commit to one. Understanding the various criteria real estate agents use to determine listing prices can also help you to get an accurate picture of what your house is worth.
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A Home’s Worth: 3 Factors to Consider
Every house is unique — but the factors used to determine property value are fairly consistent.
- Neighborhood: There’s a good reason why “location, location, location” is one of the most popular mantras in real estate. The same home, in the exact same condition, will fetch different prices depending on where it is. Proximity to desirable schools, shopping, public transportation, and other resources and infrastructure can increase the desirability of a neighborhood and thus the value of the home. Safety considerations, such as crime rates, sidewalks, and traffic signals, can also impact house values.
- House specifications: Attributes such as the size of your lot, square footage, age of your home, number of bedrooms and bathrooms, parking space, and updated mechanical systems are among the criteria buyers will typically consider. Agents may factor these in while developing a comparative marketing analysis.
- House condition: Well-maintained houses with high curb appeal can typically fetch better prices than run-down fixer-uppers. As such, your home’s condition is probably the most easily controlled aspect of its value.
Also, the style of your house and the amenities can matter. Does it have a fabulous family room, a spa-style bathroom, skylights, or a pool? That can lift the value.
To evaluate the condition of your home, take stock of any repairs, both major and superficial; any upgrades such as premium kitchen appliances; and any renovations you may have performed.
There are additional factors outside of your control that will affect the value of your home — though these may be less significant if you are not imminently considering selling.
For example, the state of the economy and mortgage rates may dictate others’ appetite for real estate purchases, as well as how much they are willing to spend. At press time, mortgage interest rates were rising in an effort to offset inflation’s impact on consumers. This can cause a softening of the housing market, or a lowering of prices, since it’s more expensive to borrow money.
Seasonal fluctuations such as holidays and weather can also affect home purchasing patterns. In addition, spring has often been looked at as the prime selling season, when families hope to find a new home and get settled before the start of the next school year.
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Increasing the Value of Your Home
Though there are some factors that may be out of your control (such as inflation and its impact), there are things you can do to increase the value of your home. If you are considering selling soon, staging your house or making small improvements, such as tidying your garden, can go a long way towards appealing to buyers — without a big financial investment.
But if you are considering investing in renovations and upgrades, it is helpful to know which will deliver the greatest returns. An online calculator can compare different projects to determine how various home improvements impact your home’s value. You might be able to finance such improvements with a home equity line of credit (or HELOC).
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Why Your Home Value Matters
If you are considering selling your house, “How much is my home worth?” is likely one of the first things you’ll wonder about. But even if a move isn’t something you are considering right now, there are other reasons why it might be important to know the actual value of your home.
• Relocation plans. For those considering relocating, getting a reliable estimate of how much your house is worth will inform the amount you can afford to spend on your next home. As taxes, real estate agent commissions, and some other fees will be based on the actual sale price of your house, this valuation will also help you to estimate some of your moving costs.
• Financial planning. Even if you aren’t planning to move, it can be wise to know your house’s value for another reason. As one of the greatest assets in many people’s financial portfolios, your home’s worth can play a helpful role in guiding long-term money planning, including retirement and estate planning.
If these things seem a long way off, there are immediate benefits to being informed about your home’s worth, too.
• Property taxes. Your property tax bill is based on the market value of your house and may change from year to year, based on your municipality’s estimate of its worth as determined by a government assessor. A reliable estimate of how much your house is worth can help you to identify discrepancies in the assessed value. If you believe there is an error, you can file an appeal in an attempt to get your property tax bill reduced.
• Homeowners insurance. Having an accurate estimate of the value of your home is also important for obtaining appropriate insurance coverage. If your estimate is too low relative to the actual value of your home, you run the risk of being underinsured in the event of a claim. Too high, and you’re paying for coverage you don’t need.
• Equity considerations. Your home’s value can also help you to access money to pay for home improvements, a financial emergency, or other needs that may arise. If the current value of your home is more than it was at the time you purchased it, you may be able to tap into that increased value with, say, a HELOC or cash-out mortgage refinance.
Home Improvements and Your Mortgage
Even if you’re not looking to sell, adding value to your home may result in savings in the near term. This can be especially true for those who are paying private mortgage insurance (PMI).
• Typically, buyers who purchase a home with less than 20% down are required to pay for PMI — a fee that is based on a percentage of your total mortgage.
• The amount of equity in your home can be determined by subtracting what you owe on your house (or your mortgage principal) from the current total value of your home. If your property value has increased, you have more equity than when you purchased your home.
• If the increase in your property value brings your equity over the 20% threshold, you can ask your mortgage loan servicer to cancel the PMI. That, in turn, will save your money every month.
The Takeaway
Understanding how much your house is worth is an important fact. Your house is a major investment, and knowing its current value can help you in a variety of ways, whether or not you are planning on selling it. Even if you are staying put, knowing its worth could help you make sure your insurance is keeping pace with its price, open the door to a home equity loan, or perhaps lower an assessment.
If you’re ready to find out your property’s value, SoFi’s money tracker app can help. Our property tracking tool can help you learn your home’s worth. It can help you know when more insurance is needed, how much renovations would cost and financing options, and what you might be able to save by refinancing your loan.
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