Content of the material
- How to Find Your Home Value in 3 Steps
- 2. Find the Cost-per-square-foot
- 3. Determine Your Range
- Related Resources
- Appraised Value Vs. Market Value: Knowing The Difference
- How To Increase Home Value: A 4-Step Guide
- Curb Appeal: 12 Ideas For Upgrading Your Home’s Appearance
- What Home Sellers Need to Know About Appraisals
- How to Find the Value of a Home
- 1. Online tools to calculate the value of my home?
- 2. Get a comparative market analysis
- 3. Use a house price index calculator
- 4. Hire a professional appraiser
- 5. Evaluate comparable properties
- Key takeaways
- Benefits of Knowing Your Home’s Value
- How To Prepare For Your Appraisal
- What is appraised value?
- What hurts a home appraisal
- Tip: Boost your home’s appraisal value
- How Much Does A Home Appraisal Cost?
- How does the appraisal impact a mortgage?
- What factors affect home value?
- What is the average cost of a house appraisal?
- Assessed value vs. appraised value
- Home Appraisal Tips For Sellers
- Provide An Offer List
- Attend The Appraisal
- Tidy Up
- Provide Comparable Properties
- How can I add value to my home?
- Should I get an appraisal before listing?
- Fair Market Value Calculator
- The Bottom Line
How to Find Your Home Value in 3 Steps
2. Find the Cost-per-square-foot
While some listings may have the price by square footage, some may not. You’ll want to take the selling price and divide by the square footage to find the price-per-square-foot. For example, a 2,500-square-foot house that sold for $400,000 is $160 per square foot.
Look at several properties, at least three if possible, and get the cost per square foot of all homes.
3. Determine Your Range
Add up the cost per square foot of all the homes you looked at and divide by the number of homes to get the average cost per square foot. Take this number and multiply it by your home’s square footage.
You’re not quite done yet. With this information, give yourself a range of 10 percent in either direction, as home values can quickly change based on nearby comps and the supply and demand of the housing market.
10% = .10 x 385,000 = 38,500
385,000 + 38,500 = 423,500
385,000 – 38,500 = 346,500
Your estimated home value appraisal range = $346,500 – $423,500.
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Appraised Value Vs. Market Value: Knowing The Difference Home Buying – 6-minute read Scott Steinberg – March 08, 2022 Knowing the difference between appraised value vs. market value is key when purchasing a home. Learn more about the role each plays in real estate transactions. Read More
How To Increase Home Value: A 4-Step Guide Refinancing – 9-minute read Miranda Crace – April 13, 2022 Home renovations can help boost your home’s value, but they can be costly too. Learn how to improve your home’s value the right way with our step-by-step guide. Read More
Curb Appeal: 12 Ideas For Upgrading Your Home’s Appearance Refinancing – 6-minute read Emma Tomsich – February 26, 2022 Curb appeal can make a big difference when it comes to selling your home. Here are 12 ways to improve your home’s curb appeal and attract more potential buyers. Read More
What Home Sellers Need to Know About Appraisals
As a seller, a low appraisal, if accurate, means you may have to lower your home’s price to get it sold. Holding out for an all-cash buyer who doesn't require an appraisal as a condition of completing the transaction is unlikely to net you a higher sales price. No one wants to overpay for a home.
Unfortunately, if your surrounding area has experienced recent distressed sales, that can lower your home’s appraisal value. If you feel that your home’s value has been dragged down by the sale price of nearby foreclosures and short sales, you may be able to convince the appraiser that your home is worth more if it’s in significantly better condition than those properties.
Getting an appraisal is also a required step when giving a home to a family member as a gift of equity.
How to Find the Value of a Home
There are many resources homeowners can use to find out property values.
1. Online tools to calculate the value of my home?
Homeowners can use a home value estimator tool to learn the value of their house. The digital tools use your address, data from comparable homes in your area, and specific questions about your home, such as features and renovations, to estimate your home’s worth.
2. Get a comparative market analysis
Real estate agents can provide you with a comparative market analysis. This is their estimation of your home’s value based on an evaluation of your property and market trends. This is commonly done before listing a home for sale.
3. Use a house price index calculator
The house price index (HPI) calculator uses data from mortgage transactions over time to estimate the value of a given house. This value is projected based on the purchase price of the home and the changing value of other homes in the area.
The house price index calculator is useful for seeing how much a house has appreciated over time and estimated future changes in mortgage rates.
4. Hire a professional appraiser
You can hire a professional appraiser to assess the appraised value of a house. This appraised value can be used to list the house at an accurate price, refinance, or determine the financial effects of a remodel.
5. Evaluate comparable properties
If you don’t want to pay an appraiser yet, you can research comparable properties in your area to estimate the fair market value of a home. Browse sites with MLS listings to find the prices for homes like yours. Consider square footage, age, condition, outdoor space, amenities, and the number of bedrooms and bathrooms during your research.
The prospect of closing the deal on a sale becomes much less intimidating when you’re heading to market with a carefully researched valuation in your back pocket. Remember, the goal is to sell your home at the right time and the right price according to your needs.
This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, real estate, insurance, or investment advice. Opendoor always encourages you to reach out to an advisor regarding your own situation.
Benefits of Knowing Your Home’s Value
Knowing the value of a home can help homeowners plan their finances more accurately.
If you bought a home for $200,000 and its true market value is now $350,000, your equity has likely increased. You can then use this equity to secure a home equity loan, which can be used to buy a second home, fund a renovation project or consolidate debt. Use the Discover Home Loans Loan Amount Calculator to see how much you can borrow with a home equity loan.
You can also use the new value of your home to calculate your cash-out refinancing options. With cash-out refinancing, you can rewrite your mortgage loan for a larger amount and take that amount in cash. Use the Discover Home Loans Cash-Out Refinance Calculator to input the current market value of your own and learn more about your options.
How To Prepare For Your Appraisal
In addition to checking the exterior and interior condition of the home, the appraiser will also look for anything needing repairs. Here are some areas to consider addressing before your appraisal:
- Check your electric garage door opener to make sure it’s working.
- Secure a handrail on steps or stairwells.
- Secure second-floor doors with decks.
- Secure a railing to any and all raised decks.
- Ensure all utilities are functional with no safety issues.
- Ensure water, electricity and air conditioning are functional.
- Take care of any plumbing issues, roof leaks or stains.
- Check for cracks in the walls, ceiling or foundation.
- Check for water intrusion through the foundation.
- Ensure your roof is sound and has at least 3 years of economic life remaining.
This is by no means a complete checklist of repairs that might need to be addressed before a home appraisal. It is, however, a list of the most common issues that may arise either before or during the inspection.
By addressing any repairs or upgrades before the appraisal inspection, you’ll be better equipped for a smooth home buying process and possibly a higher home value.
What is appraised value?
A home appraisal is an objective, third-party assessment of a home’s market value. They’re ordered by mortgage lenders to assess the market value and to ensure the borrower isn’t trying to borrow more money than the home is worth. So, the appraised value sets the amount that may be mortgaged for a property.
The third-party assessors who determine the value are known as appraisers. Appraisers often work for appraisal management companies or AMC’s, and they operate in a heavily regulated industry. Licensed appraisers must complete 150 hours of state-regulated education, 1,000 hours of fieldwork, plus ongoing training after they are licensed (hours may vary by state and credentials). The combined classroom and field education prepares them to determine the value of a home.
What hurts a home appraisal
So what negatively affects a home appraisal? Well, some of the most obvious factors include location, age of the home, and materials used to build the home. Curb appeal, recent home improvements, and current market trends can also come into play with your appraisal.
It’s worth mentioning that every appraiser takes a different approach to their home inspections. That said, you can expect your appraiser to look at the value of comparable homes as part of their decision-making.
Tip: Boost your home’s appraisal value
Remember the $500 rule: homes appraise in increments of $500. So, if you can make a repair or replacement (over $500), take care of it. It may be as simple as getting a new appliance or new windows.
Looking for more ways to upgrade your home? Check out our Top Home Improvement Projects article.
How Much Does A Home Appraisal Cost?
Most appraisals cost $300 – $450, with the national average being around $400, according to Fixr. However, the cost depends on a few factors, including:
- The size of the home
- The type of home
- The home’s location
- The condition of the property
- The amount of work and time required
These factors affect the amount of time, effort and work that goes into the appraisal, which is what ultimately influences the borrower’s sale price. For example, a larger home or multifamily property has more space to walk through and assess than the typical single-family home.
A home that has unique characteristics makes it difficult to find comps because those features often make the house one of a kind.
If the home is in a rural area with nothing around it, the appraiser may have difficulty finding any other properties in the area, let alone one that is similar. This situation may require deeper research, which takes more time.
How does the appraisal impact a mortgage?
A buyer’s lender will base a home loan on the appraisal’s estimate of a home’s fair market value. Even if you’ve already agreed on a purchase price and accepted an offer, if the buyer’s lender sees a lower appraisal amount, it could pull the loan. More likely, the bank will adjust the loan based on the loan-to-value (LTV) ratio, meaning the buyer will have to make up the difference in the appraised value and the purchase price if they want to buy the home.
The lender’s primary interest isn’t helping the buyer buy a home — it’s protecting their investment. As such, the appraisal is a very important point in the home sale process. Still, a low appraisal doesn’t mean it’s impossible to get your desired purchase price.
What factors affect home value?
A number of factors can affect the value of your home, including:
- The neighborhood
- Its 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.
What is the average cost of a house appraisal?
You can expect to spend roughly $400 for an appraisal, but the cost can be lower or higher based on where you live and the size of your home.
Assessed value vs. appraised value
Appraised value and assessed value are not interchangeable. For one thing, don’t expect your county’s assessor to walk through your residence to determine its assessed value. The majority of homeowners want their property’s appraised value to be higher than the assessed value because of tax implications.
Are you planning to stay in your current home for the foreseeable future? Then don’t be surprised if the assessed value starts to increase over time.
Home Appraisal Tips For Sellers
When you’re selling your home, it’s important that the home doesn’t appraise for significantly less than what the buyer agreed to pay. Unless you’ve got a cash offer, a low appraisal could be a deal-breaker. Here are some ways to help your home appraise for the right amount.
Provide An Offer List
If you received more than one offer for your home, let your appraiser know. Multiple offers can show the appraiser that your home was priced well. Provide the appraiser with a list showing each offer you received.
Attend The Appraisal
As the seller, you’re allowed to be present when the appraiser does their walkthrough. Accompanying the appraiser gives you the chance to point out any upgrades, improvements or particularly charming design features. This is your chance to make sure the appraiser doesn’t overlook those fantastic new cabinets you just installed.
You can’t change your home’s square footage or location, but you can make your home look bigger, brighter and more valuable with a few affordable home renovation tricks.
Maximize your space by putting away countertop appliances and clutter. Replace dim light bulbs with brighter ones. Hang mirrors to maximize natural light and give the illusion of a bigger room. Pull furniture away from the wall. Do whatever you can to make your home look bigger and brighter.
Provide Comparable Properties
If you or your agent are aware of recent sales that could be considered in the report, provide them to your appraiser. Search public records for homes with a final sale price close to what you asked for your home. You can present this list to the appraiser when they arrive at the home.
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,” 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, Duffy adds: “This is one of the most cost-effective ways to improve value.”
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.
“It also pays to install a new garage door,” Duffy says. “Some reports estimate a new garage door can increase home values by 4 percent — great curb appeal does matter.”
Should I get an appraisal before listing?
A pre-appraisal isn’t required, but it can be a good idea if you’ve done a lot of home upgrades recently and you’re not sure how much value they’ve added. They’re also helpful if there aren’t good comparable listings in your area or you’re going to sell for sale by owner (FSBO).
If you’re selling in an extreme buyers or sellers market, your home could sell quite a bit above or below your appraised value, so ask your agent if they think doing a pre-appraisal makes sense for you.
Fair Market Value Calculator
Smart homebuyers and sellers know that there are plenty of free tools out there to help determine fair market value, like free home appraisal calculators. Even if the agent or professional appraiser has a number, you can still search for yourself. Look for websites that have MLS listings and search for similar homes. Compare their ages, square footage, amenities and outdoor space.
Zillow offers a free home appraisal calculator. To get started, you simply enter the home’s address. It immediately provides an estimate, and you can see what year it was built, the lot size and other basic information. This can be a good starting point for someone who plans on listing a home.
If you want to find an appraisal for a home that is on the market, you can navigate to a home value estimator like the one from Chase and enter the address in the search box. If it is indeed for sale, the page will show an estimate, the square footage, the year it was built, an estimated value change and an estimated improvement cost. Other tools include a mortgage calculator and an affordability calculator.
The Bottom Line
When everything goes smoothly, the home appraisal is just another box to check on a closing checklist. When the appraisal value is lower than expected, the transaction can be delayed or even canceled. Regardless of which situation you encounter in your home buying, selling, or refinancing experience, a basic understanding of how the appraisal process functions can only work in your favor, especially if you’re buying your first home.