WHAT IS THE VALUE OF YOUR HOME AND WHY IS IT IMPORTANT?

 Your neighbor just sold their home and got what you think is a rather good price.  Now you are curious.  How much is my home worth and how can I determine its value?  A recent Harris Poll indicates that nearly 73% of Americans say knowing the value of their home is important.  

Below are 5 tools you can use to determine the value of your home.

1. An online valuation tool - It has been reported that nearly 22% of U.S. homeowners determine the value of their home via an online estimator.  The technical term for these tools is automated valuation model or AVM.  Companies like Zillow and Redfin use such sites.  These sites utilize public records like property transfers, deeds of ownership and tax assessments along with some mathematical modeling to predict your home's value based on recent sales and listing prices in the area.

2. Comparative Market Analysis (CMA) - A local real estate agent can provide a comparative market analysis based on recent sales in your area of homes with similar characteristics as yours, i.e., age, bedrooms, baths, square footage, and other special features.

3. The FHFA Home Price Index Calculator - This tool uses repeat sales method to track a house's change in value from one sale to the next.  Then the information estimates how values fluctuate in each market.  It is an easy way to see how much your home may have appreciated over time.

4. Professional Appraiser - Although lenders require a home appraisal before they will approve a mortgage, there is nothing to say you cannot hire an appraiser to estimate your home's value.  More than 28% of U.S. homeowners determine their home's value through an appraisal.  Among the things an appraiser evaluates is the current market, the property, and comparable properties to create a final opinion of value for the home.

5. Evaluate Comparable Properties - Over 56% of U.S. homeowners estimate their home's value by looking at comparable properties.  To choose accurate comps you must utilize an "apple to apples" approach.  Look for similar size, location, condition, and upgrades.  You will need at least three valid comps to come up with a likely range of market value for you home.

Why is home value important?

Knowing your home's value allows you to:

• evaluate what you can afford.
• determine an appropriate listing price.
• decide how to price your house.  
• refinance ability.
• home equity line of credit. 
• insurance premium.
• property tax

all are based on home value.

Bottom line:  A house is worth whatever someone will pay for it! 

Knowing your home value better prepares you to buy, sell or refinance or tap into your home's equity or even negotiate lower property taxes.  It can also provide you with a picture of your overall financial health.