How Much Is My House Worth? A Beginner's Guide | Bankrate (2023)

While the past few years have been a roller coaster ride on many fronts, there was a silver lining for homeowners: Home prices have risen considerably. You might be wondering if you should take advantage of the climb in values and sell your home or tap its newfound equity. As you consider your options, a good starting point is to ask yourself: Exactly how much is my house worth?

How much is my house worth?

When getting a home value estimate, consider the three main types of valuation:

  • Fair market value: Fair market value encompasses what your home looks like to prospective buyers compared to other homes in the area. Consider the sale price of a home that’s similar to yours (same number of bedrooms and bathrooms, square footage or outdoor space, say). If you work with a real estate agent to help you sell your home, this is where your agent will start: by looking at comps to gauge what buyers have been willing to pay for a property comparable to yours.
  • Appraised value: While the appraised value of your home factors in comps, it differs from fair market value. To calculate appraised value, a licensed appraiser considers the location, size and condition of your home, and any renovations you’ve completed. The appraised value is what mortgage lenders look at when a borrower buys a home or refinances their mortgage.
  • Assessed value: The assessed value is the assigned dollar value of your home used by local county tax assessors to determine property taxes. “Tax assessors calculate assessed value based on various factors, which may include the appraised value and the fair market value, as well as any home improvements, whether you generate income from the property, and any tax exemptions,” explains Jade Lee-Duffy, a Realtor with Reali in San Diego. Usually, the assessed value is lower than fair market value and doesn’t actually represent how much a property could sell for, Lee-Duffy says.

Bankrate insight

(Video) A Beginner's Guide to Knowing The Value of Your House

While an online home value estimator can be helpful in getting a sense of what your house is worth, the number you see is only a starting point, not the final word.

5 ways to find out what your house is worth

1. Enter your address into a home value estimator

  • Best for: Sellers, buyers or anyone curious about the ballpark value of a home

There are loads of online tools that offer a quick home value estimate. These online tools — called automated valuation models, or AVMs — use algorithms and publicly available data, such as recent sales, tax assessments and other public records, to generate an estimate.

There are many home value estimators out there, each using a different methodology, so your estimate can vary. These include:

“Home value estimators are good starting points to assess the value of your home very quickly,” Lee-Duffy says. “However, this value is based on an algorithm that usually takes into account the number of bedrooms, square footage, location and market activity. It doesn’t take into consideration factors such as recent upgrades, condition of the house, curb appeal and external factors, such as traffic noise.”

In addition to an online estimator tool, you might choose to obtain a cash offer from an iBuyer.

“Both a home value estimator and an iBuyer company provide sellers with some idea of what their home is worth,” explains Arlene Reed, an agent with Coldwell Banker Warburg Realty in New York City, but “the information from both is frequently inaccurate. The home value estimator tells you what your home is worth, while the iBuyer company offers to buy your home at what they estimate it’s worth.”

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  • Pro: The algorithms that power online estimators and iBuyer offers have come a long way. Now used by millions, they can be simple ways to get a fast ballpark estimate (or offer) just by typing in an address.
  • Con: Take these computer-generated estimates with a grain of salt. They may sometimes be based on incomplete or erroneous data, or may not take into consideration a recent high-end kitchen renovation or bathroom addition, for example. If you obtained an offer from Offerpad, Opendoor, or another iBuyer, here’s how to tell if the offer is fair

2. Ask an agent for a free comparative market analysis

  • Best for: Those who are selling or considering selling a home

Real estate agents typically offer a comparative market analysis (CMA) for free in hopes of winning your business if you’re selling your house. To complete the CMA, the agent pulls data about recent sales of comps in the area. They then draw on their knowledge of the neighborhood and any special characteristics of your property to estimate its value. A buyer’s agent may also provide this same service for any home a buyer wants to make an offer on.

“A good agent will have the tools necessary to drill down and find an accurate market value,” says Robert Krasow, a Realtor with Michael Saunders & Company in Sarasota, Florida. “An experienced professional follows the market, looks at home conditions and knows the neighborhood — all while making determinations using both data and their expertise.”

  • Pro: It’s helpful to have an expert identify comps, answer questions and give guidance.
  • Con: Different real estate agents may use different comps or have conflicting opinions of your home’s value. In addition, if there haven’t been many sales in the neighborhood or the comps are not that similar to your property, the estimate won’t be as accurate.

3. Check your county or municipal auditor’s website

  • Best for: Those who want to understand their home’s value from a tax perspective

County auditors periodically assess the value of residential properties for property tax purposes, and this information is searchable online. You can look up the assessed value of your house to see if it has appreciated, or compare the figures with other homes for sale.

  • Pro: This objective data is easily accessible and provides another point of comparison.
  • Con: This estimate is for the taxable value of your home and may not reflect some of the market factors that affect the sales price, such as time of year, competitiveness or curb appeal. In some localities, assessed values may be far off from market values.

4. Identify trends with the FHFA House Price Index calculator

  • Best for: Those who want to understand property price trends in their area over time

The Federal Housing Finance Agency’s House Price Index (HPI) calculator offers yet another take on home value. The tool analyzes historical mortgage data to project what homes in your state or metropolitan area are likely to be worth based on the rate of appreciation of all homes in the area over a given period.

  • Pro: The calculator draws on data from tens of millions of home sales and offers insights about broad house price fluctuations, so homeowners can compare the relative affordability of neighborhoods over a period of time.
  • Con: This calculator doesn’t estimate the market value of a particular house. Instead, it offers a look at home price appreciation or depreciation over time. While this will give you a general idea of the local market, it won’t drill down into the specifics of your property.

5. Hire a professional appraiser

  • Best for: Those who want the most professional and accurate home value estimate, and may want to use the data as they consult with a mortgage lender

Mortgage lenders hire appraisers to confirm the value of a house before approving a loan. Some home sellers choose to take the extra step of hiring an appraiser, but it’s not required. The appraiser considers the characteristics of the property, such as how many bedrooms and bathrooms it has, as well as comps, similar to a CMA prepared by a real estate agent.

  • Pro: Professional appraisers are typically licensed or certified by the state they work in and can provide an objective opinion of the value of a home.
  • Con: If you’re seeking a mortgage, you’ll have to pay for the appraisal the lender orders. An appraisal costs an average of about $350, but can be anywhere from roughly $313 to $420, according to HomeAdvisor.

My home’s value went up. What should I do?

Your home’s value can rise due to a range of factors. Home prices have increased in many places recently due to a shortage of supply. Prices were also boosted recently by some of the lowest mortgage rates in history. Those rates have since increased, but prices remain high. If your home value has increased, you have a few options and considerations to make:

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  1. You might be able to save money by eliminating private mortgage insurance. If you’re paying for private mortgage insurance (PMI) and your home’s value has gone up to the point where you now have at least 20 percent equity, you can ask your lender to cancel your PMI premiums.
  2. You might need to adjust your homeowners insurance policy. Your homeowners insurance cost and coverage are typically based on your home’s value. If it has increased, you’ll want to make sure you’re fully protected. “It’s important to review your property’s value with your insurance agent yearly to make sure your residence has the proper insurance coverage,” says Kimberly Smith of Garnet Property Group in Bristol, Connecticut.
  3. You might be in a better position to improve your home. With more equity in the property, you can take advantage of a home equity loan or cash-out refinance and invest in a renovation or remodeling project. “Determining a home’s valuation is useful if you’re considering tapping into your home’s equity in the form of a home equity loan, home equity line of credit or cash-out refinance, so that you know how much equity you’ve accrued,” Smith says.
  4. You might consider selling your home. You could stand to profit if your home’s value has gone up considerably. But before putting it on the market, carefully evaluate whether it really is the right time to move for you or your family, whether you’ll be able to find a new home quickly and how you’ll pay for it. “If it is a good time, making minor repairs and decluttering your property is always going to help increase the final sale price,” Lee-Duffy says.

My home’s value went down. What should I do?

While home values across the board have increased, there could be factors beyond the homeowner’s control that can cause prices to decline.

“Local political issues, climate changes, transportation and employment opportunities — or lack of these last two things — can influence home values,” says Gerard Splendore, an agent with Coldwell Banker Warburg Realty in New York City. “Selling may not be a good idea, unless it is apparent that values will continue to decrease.”

If you can wait out a downturn rather than making a rash decision, that may be best.

“Home property values are typically influenced by the current economic climate, as well as the supply of houses on the market, which will change over time,” Lee-Duffy says. “If you can prolong moving, housing prices will eventually start to rebound.”

What factors affect home value?

A number of factors can affect the value of your home, including:

  • The neighborhood
  • The home’s age
  • Its condition
  • Its size
  • Any home improvements or upgrades

There are other factors that impact property values overall, too. These include the local housing market, economy, interest rates and tax rates, Reed says.

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How often should I check my home’s value?

While you don’t need to revisit your home’s value too often, checking on it periodically, such as once a year, is a smart move for several reasons. Knowing the current value of your home allows you to determine, for example, whether your homeowners insurance policy still adequately covers the property.

“The value of your home also affects your taxes,” Reed says. “You might be able to lower your assessment.”

It can also be helpful to know the value of your home so you know how much equity you’ve accumulated, which could allow you to qualify for a home equity loan or line of credit, or cash-out refinance.

Of course, knowing the value of your home is very important if you’re considering selling. You’ll know where you stand with buyers, and what you could potentially take home after the costs of the transaction and taxes.

How can I add value to my home?

You don’t get a second chance to make a first impression, and this bit of wisdom can apply to your home and its value.

“Your property’s curb appeal does make a difference,” Lee-Duffy says. “Make your home welcoming and tidy — cut your grass, trim any shrubs and add some new plants or flowers.” A fresh coat of paint either on the interior or exterior of the house will more than pay you back for the money spent, she adds: “This is one of the most cost-effective ways to improve value.”

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A minor bathroom or kitchen update (as opposed to large-scale renovations) can also help improve your home’s resale value. You can simply replace an outdated sink, old tiles or dated light fixtures to give these spaces a refresh.

Bottom line

No single home valuation method is guaranteed to be 100-percent accurate. That’s why using a combination of resources can help give you a more informed perspective of what your home is worth. For example, you might get a free CMA and conduct your own research using an online home value estimator, as well as the FHFA calculator and county auditor’s website. Averaging together all the final values you gather could give you a more accurate picture of your home’s value.

Ultimately, however, the most reliable home value estimates come from professionals who take the time to carefully assess your property based on a variety of factors. “All of the evaluation tools are useful in giving an idea of the worth of your home, but an appraiser and/or an experienced agent will be the most accurate sources for determining value,” Krasow says. “A trained professional will have an advantage, as a computer cannot determine intrinsic value or consider the condition and improvements you’ve made to your home.”

FAQs

How do I work out what a house is worth? ›

In this guide:
  • Find houses that sold near you.
  • Look at price trends by your area and nationally.
  • Use a house value calculator.
  • Get an estate agent to value your house.
  • Look at local asking prices.
  • Consider what influences your house value.
8 Jun 2022

How much is my house worth most accurate? ›

The most accurate home value estimator is Redfin as it uses historical pricing data and also considers real-time demand and market trends. Redfin estimates are more accurate than Zillow and the interface is intuitive making it easy to find exactly what you're looking for.

Will house prices drop in 2023 UK? ›

Our forecasts suggest UK house prices will fall 5 per cent in 2023 and again in 2024 before returning to growth. Various factors will keep a floor under pricing, from the shortage of homes to regulations introduced since the global financial crisis that have kept higher loan-to-value lending at sensible levels.

Will house prices rise in next 5 years? ›

Many probably will. Into 2024 and 2025, research house Capital Economics is predicting a gradual rebound of house prices. We aren't likely to see the 'hockey stick' growth that was experienced during the pandemic years, but values are likely to creep up towards the end of the period.

How can I get my house valued without selling? ›

' Try two or three estate agents to get an average idea of price, be choosy and there's no harm in doing your own research before letting them through the door. And be honest – tell them that you're not looking to sell.

Are Zillow estimates 2022 accurate? ›

Zillow's Zestimate has been found to have a nationwide error rate of 1.9 percent for on-market homes. When it comes to estimating home values for off-market housing, the error rate jumps to 6.9 percent. Overall, the accuracy of Zestimate is approximately 4 to 5 percent.

Will houses ever be affordable again UK? ›

A housing crash in 2022, however, is unlikely. Prices continue to increase due to plenty of demand and a short supply of homes. For houses to be affordable again in the UK, it is simple—more affordable homes have to be built for people to buy and rent.

Will 2023 be a better time to buy a house? ›

Home Prices Will Likely Drop

As interest rates have risen throughout 2022, home sales have seen a sharp decline. Fannie Mae has forecasted that total home sales will reach 5.64 million in 2022, an 18.1% drop from 2021; in 2023, that figure is expected to decline again to 4.47 million, a 20.7% decrease from this year.

Should I sell my house now? ›

With continued supply shortages and high buyer demand, now is a good time to sell your home. And with interest rates on the rise, it may be better to sell sooner rather than later — if rates spike much more, some prospective buyers may retreat from home shopping. But consider your reasons for selling carefully.

Are house prices likely to come down 2022? ›

Further rate rises are expected throughout 2022, which could seriously dampen the housing market because it means mortgage repayments will increase. The cost of living crisis is likely to be the biggest cause of a slowdown in the housing market.

Will property prices fall in 2023? ›

A median-priced house in Sydney could plunge in value by a further $175,087 by the end of 2023, down to $1.1 million, NAB has forecasted.

How much are house prices likely to drop? ›

It said house prices will have risen 6 per cent by the end of 2022 but that they will fall 5 per cent in 2023 and a further 5 per cent in 2024 as a result of the sudden spike in mortgage rates caused by the government's fiscal plans. This would take house prices back to where they were last summer.

What makes a home unsellable? ›

Factors that make a home unsellable "are the ones that cannot be changed: location, low ceilings, difficult floor plan that cannot be easily modified, poor architecture," Robin Kencel of The Robin Kencel Group at Compass in Connecticut, who sells homes between $500,000 and $28 million, told Business Insider.

What makes a house less valuable? ›

Your property value is often out of your control. Changes in the real estate market can lower the value of your home. Natural disasters and climate change can lower your property value because the property is a greater risk to purchase. Foreclosures in your neighborhood can also drive down property value.

What increases the value of your home when selling? ›

Update your home's finishes.

Some experts argue that a fresh coat of paint throughout your house can increase the home's sale price by as much as 5 percent. Other simple upgrades, from replacing old light fixtures to changing out your front door, can also give your home a nice bump in value.

Are zestimates high or low? ›

The Zestimate is often less accurate than your Realtor's estimate and can be thousands of dollars off. According to Zillow's Zestimate page, “The nationwide median error rate for the Zestimate for on-market homes is 1.9%, while the Zestimate for off-market homes has a median error rate of 7.5%.

Who is more accurate Zillow or Redfin? ›

Redfin's home value estimator is more accurate than Zillow's when it comes to pinpointing the sales price. According to Redfin, its estimates are approximately 74% accurate within 5% of the sales price for listed homes. By comparison, Zillow is only 67% accurate within 5% of the sale price for listed homes.

Which is more accurate Zillow or realtor? ›

Realtor.com is arguably the most accurate real estate listing platform today. It is affiliated with over 580 regularly updated MLS databases across the U.S. Realtor.com also operates in more regions than Zillow and Redfin simply because it's been around for longer, that is since 1996.

Is a house price crash coming UK? ›

Against this backdrop, JLL is forecasting that UK house prices will fall in value in 2023 by 6% which equates to an average discount of £17,500 from the average UK house price of circa £290,000. Of course, as in any market, there will be winners and losers.

Are houses overpriced right now UK? ›

Average UK house prices hit a record £296,000 in August 2022, £36,000 higher than the same month a year earlier, according to figures from the Office for National Statistics (ONS). The ONS said house prices grew by 13.6% over the year to August, down from a peak of 16% a month earlier.

How much over asking price should I offer on a home 2022 UK? ›

How much over asking price is too much? In a hot market, experts recommended offering at least 1% to 3% above the asking price in a bidding war. But today's home buyers may face less competition. In June 2022, the average home actually sold for about 1% below its list price, according to Redfin.

Is it smart to buy a house in 2022? ›

Don't expect much relief in the form of lower rates in the coming months. Therefore, it certainly does not seem to be a good time to buy a house as rates have risen much more rapidly in 2022 than most industry analysts and economists had initially predicted.

Will it be a good time to buy a house in 2022? ›

November 2022 is a non-ideal time to buy your first home. Mortgage rates are up, home prices are flat, and you'll likely buy before the market hits bottom. Home buyers who can be patient will come out ahead. Use today to prepare if you're buying a home in December or early 2023.

What will happen to house prices in 2024? ›

"House prices are forecast to fall by 9.0 per cent between the fourth quarter of 2022 and the third quarter of 2024, largely driven by significantly higher mortgage rates as well as the wider economic downturn," the organisation said.

What should you not do when selling a house? ›

8 top home selling mistakes you should avoid
  1. Underestimating the costs of selling. ...
  2. Setting an unrealistic price. ...
  3. Only considering the highest offer. ...
  4. Ignoring major repairs and making costly renovations. ...
  5. Not preparing your home for sale. ...
  6. Choosing the wrong agent or the wrong way to sell. ...
  7. Limiting showings.
9 Jul 2022

What is the slowest month to sell a house? ›

Sellers can net thousands of dollars more if they sell during the peak months of May, June, and July versus the two slowest months of the year, October and December, according to a 2022 report by ATTOM Data Solutions.

Should I sell my house before the market crashes 2022? ›

You may be asking should I sell my house in 2022? Overall, 2022 is a good time to sell a house. And, I predict 2023 will be a good time, too. The driving factor which will continue to support real estate values is the high demand for entry level and mid-tier homes.

Where will mortgage rates be in 2023? ›

As for mortgage rates, some experts anticipate that the best-case scenario for a 30-year fixed rate will be roughly 5.5% by the end of 2023. Others expect rates to stay in the range of 6.5% to 7.5% throughout the year, with Freddie Mac predicting an average 6.4% in a recent forecast.

Will the housing market bounce back in 2022? ›

And Fannie Mae predicts home sales to drop 16.2% by the end of 2022. But as we covered earlier, home price growth continues to increase compared to the previous year. And since 2021 was a record year for sales, what we're really seeing now is home sales volume returning to normal, pre-pandemic levels.

Will property prices fall? ›

Other experts are projecting a much worse house price fall on a national scale. Lloyds Bank last week said UK house prices could tumble every quarter next year, reaching a peak drop of 8.2 per cent caused by the Bank of England lifting interest rates to four per cent.

What will happen to house prices in 2025? ›

This means price growth in the years running up to 2025 will add up to 2021 levels.” Should interest rates soar further than anticipated, taking mortgage rates over the five per cent mark, there is a strong likelihood that house prices will fall.

Will property prices fall in 2026? ›

According to latest predictions from Knight Frank, house prices will then begin to rise, going up by two per cent in 2024 and four per cent in 2026. Overall, this means that over five years house prices will go up by 1.5 per cent.

What will house prices be in 2030? ›

Prices Will Be Much Higher

It's almost a given that in spite of current high prices, houses will cost even more 10 years down the line. According to RenoFi, the cost of a single-family home in the U.S. is likely to hit $382,000 by 2030.

What are property prices going to do in 2022? ›

Expecting a 3.9% increase in average house prices during 2022, as quoted in the Sunday Times, 5th December 2021. Expecting a 3.5% increase in average house prices during 2022, as quoted in the Sunday Times, 5th December 2021.

Will mortgage interest rates go down in 2023? ›

The best bet is that we continue to see mortgage rates in the ballpark of current levels, perhaps from 6.5% to 7.5%.” Mortgage Bankers Association (MBA): An average of 5.5% at the end of the fourth quarter of 2022 and 5.4% at the end of 2023.

Why do house prices never fall? ›

The supply of housing can be slow to react because it takes a long time to build or fix up a house. In some urban areas, there simply isn't any more land to build on. So, if there is a sudden or prolonged increase in demand, prices are sure to rise.

Is Zillow an accurate estimate of home value? ›

For most major markets, the Zestimate for on-market homes is within 10% of the final sale price more than 95% of the time. The nationwide median error rate for the Zestimate for on-market homes is 1.9%, while the Zestimate for off-market homes has a median error rate of 6.9%.

Is Zillow Zestimate or Redfin more accurate? ›

Redfin's home value estimator is more accurate than Zillow's when it comes to pinpointing the sales price. According to Redfin, its estimates are approximately 74% accurate within 5% of the sales price for listed homes. By comparison, Zillow is only 67% accurate within 5% of the sale price for listed homes.

Is my home really worth what Zillow says? ›

Several studies demonstrate that it's possible Zillow can be accurate within 80-90% of the value of a home. This means that its estimates can be a good starting point. However, when you want to price a home to sell or know what a home is really worth so you can buy now, its numbers are not accurate enough.

Is SmartZip more accurate than Zillow? ›

The platform also boasts Zestimates, a tool designed to allow sellers to evaluate, and determine the market value of their properties. Although Zillow estimates are highly valuable, SmartZip's home value tool offers more value to its users when it comes to identifying possible property values.

Are zestimates close to appraisals? ›

The Zestimate is not an appraisal and it should be used as a starting point. We encourage buyers, sellers and homeowners to supplement the Zestimate with other research such as visiting the home, getting a professional appraisal of the home, or requesting a comparative market analysis (CMA) from a real estate agent.”

What is better than Zillow? ›

With a 4.26 out of 5 score, we've selected Realtor.com as the best Zillow alternative. It has a straightforward pricing structure that includes a flat advertising fee along with advertising costs varying by ZIP code. The platform has the highest monthly search volume out of the six Zillow competitors evaluated.

How accurate is realtor com home values? ›

However, we found no evidence that Realtor.com's value estimates are more precise than other options. Unlike Zillow and Redfin, Realtor.com doesn't share its median error rate, so it's impossible to know how accurate its valuations are.

Why is my house worth less than my neighbors? ›

Here are some potential reasons your home value is lower than you expect: Your house doesn't compare to others in your neighborhood. Your home is near undesirable landmarks. You overimproved your house.

Why does Zillow value my home so low? ›

If your home has more value-factors (bigger square footage, better condition, more amenities, etc) than the comparables that are pulled, then your Zestimate is likely to be lower than actual value.

Which housing app is most accurate? ›

Realtor.com has the most reliable app because of the influence and needs of the National Association of Realtors and because the data is mined from the MLS. Available for Android and iOS, this home buying app provides property listings sourced directly from over 800 MLSs. The data refreshes every 15 minutes.

Why are Zillow estimates so wrong? ›

Zestimates are only as up to date as the data behind them, meaning they may be outdated or incorrect. Zestimates may not reflect improvements, mistakes in property taxes paid, or exceptions to tax assessments.

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