A property owner often wonders about what is my house worth today before they decide to sell their home, refinance or obtain an equity line of credit. One of the easiest ways to find out your home’s value is to have a Realtor prepare a free comparative market analysis for you. It will also give you an idea of how much equity you have in your home if you decide to refinance it or obtain a second mortgage equity loan or equity line of credit.
Another way to find out what your home is worth is to obtain an appraisal prepared by a certified appraiser. In fact, your lender will request you pay for formal appraisal before they will agree to refinance or give you a second mortgage on your home. Lenders also use a broker price opinion or BPO prepared by a local Realtor, which is similar to a comparative market analysis, when they want to know the value of your home before approving a short sale transaction.
Factors that Determine What is My House Worth Today?
When you look at a comparative market analysis or an appraisal, your home is being compared to similar homes in your neighborhood or subdivision by adjusting up or down for square footage, number of bedrooms and baths, features, amenities, upgrades and age of the home. By looking at the sold prices of these comparable homes, you, your Realtor and/or your lender are able to determine an estimate of the value of your home if you were to sell it today.
A comparative market analysis also gives you information on the number of homes that are under contract, the homes that have expired and did not sell and the number of homes that are currently on the market which have not sold yet. It also tells you the number of days a home has been on the market and how long it took from the time it was listed to the time it sold. However, a comparative market analysis only gives you information about properties that are listed with a Realtor and does not tell you about for sale by owner properties.
An appraisal is a more formal report prepared by a certified appraiser and will give you information about all homes that have sold including for sale by owner homes. A certified appraiser that belongs to a national organization such as the American Society of Appraisers (ASA) is held to a higher stand of ethical behavior and must adhere to the ASA’s code of ethics. Appraisals can be done by using what is called a sales comparison approach or by using a cost approach.
The sales comparison approach is typically used when a property is offered for resale by comparing at least three to five other comparable sold properties in the neighborhood and making adjustments up and down similar to determine a value for your home. The appraiser also looks at the condition of the home and makes adjustments based upon depreciation. The cost approach is used for new construction to calculate the costs of replacing the home if it were completely destroyed or damaged. Both an appraisal and a comparative market analysis will be able to answer your question – what is my house worth today.
It is important for an owner to understand how the value of their home is determined so that they completely understand how the Realtor or appraiser arrived at their decision and can provide the best answer to their concern about what is my home worth today. Knowing how much your home is worth will also help you make the right financial decisions for you and your family when it comes to selling, refinancing or taking out a second mortgage. The important thing to remember is home prices and values go up and down depending on the market conditions, economic factors and any upgrades that you make so your home’s value is constantly changing at any given time.