How Much Was My House Worth? How to Value a Home
Finding the value of your home is something every home owner wonders at one point or another. Whether it’s for financial reasons or because you’re thinking about making a move, getting an accurate estimate of your home’s worth is always a good thing to do from time to time.
Also known in the real estate industry as a home appraisal, there are a number of ways to get an estimate on your home’s value. In this article we will go over when it’s a good idea to get a home appraisal, the different ways of getting a home value estimate and finally how home appraisals are done.
At the end of the day, a home appraisal is just one tool that helps people manage their finances and make decisions. While important, no home appraisal is a crystal ball. The ultimate determination of a home’s value is how much a buyer is willing to pay for a home. Until a sale happens, all it is an educated estimate.
Trustindex verifies that the original source of the review is Google.
Diane Gardiner2021-03-15I had a great experience working with Jeff and his team in selling my home! I was overwhelmed in where to start and Jeff relieved my stress from our first connection. My house needed some work and he guided me through every step, from the in depth research and understanding of my area, renovation options, staging and showcasing his ethical negotiation skills, providing exceptional results above my expectations. His team went above and beyond staging my home to showcase its true value. I would highly recommend Jeff if you are looking for exceptional service, prompt communication and incredible results!Trustindex verifies that the original source of the review is Google.
Victoria Jablonski2021-01-28As first-time home sellers we came into the process with many questions. Jeff was extremely patient, professional, ethical and always shared his knowledge to help us make the right decisions along the way. Stephanie came in to stage our home, and did a beautiful job, even recommending/facilitating affordable improvements like paint & lighting to make our house that much more attractive. The O'Leary's are clearly passionate about what they do and got us the result we were looking for quickly! We wouldn't hesitate to recommend their services.Trustindex verifies that the original source of the review is Google.
Robin Prosper2021-01-26Jeff helped my husband and I with the purchase of our first home. Before working with Jeff, the process seemed daunting and overwhelming, but he made it so simple. Not only did he find us the perfect home, but he negotiated a better price for us than we ever thought possible. Jeff really knows his stuff, and I would highly recommend him to anyone looking for a realtor.Trustindex verifies that the original source of the review is Google.
Drew Kulig2021-01-19We have nothing but great things to say about Jeff; his attention to detail, his attitude, and his commitment to his client by far exceeded our expectations. He is everything you would want your realtor to be and more. He was always available when we had questions, gave us a good understanding of the market, and made the whole real estate process easy. Jeff sold our house well over asking, and we could not be happier! Right from the get go, the day we listed our house, his marketing strategies took over and were (within just an hour) on multiple websites, ads and social media platforms. We had bookings for house visits as early as 2 hours from listing. During negotiation, Jeff was well organized, and provided us with great advice throughout. Ultimately, he got us a much higher price than we were expecting. We certainly recommend Jeff O'Leary for all your real estate needs!Trustindex verifies that the original source of the review is Google.
Claudio Saldivia2021-01-06There's so much to say...Jeff is AMAZING!!! He is extremely knowledgable, personable, professional. He will always be recommended to my friends and family. Selling and/or buying a home is the most personal of transactions. Jeff and his wonderful wife Stephanie did an outstanding job in the the staging and final sale of our property, exceeding all our expectations. When we were ready to buy, Jeff's knowledge of the market and focusing his search on our must-haves, helped us find the perfect home for our family. He never overpromised and certainly never under delivered. We have our broker for life. Thanks so much again Jeff!!!Trustindex verifies that the original source of the review is Google.
John Cianfarani2020-10-03Absolute rock star to work with! Jeff helped focus our random house hunting searches to the specific areas that would best fit our needs, lifestyle and budget. That quickly led us to find and purchase our second home. I have enjoyed his approach to appraising property and strategy for bidding which both ended up saving us a significant amount. He has always been quick to get ahold of via call, text or email for any and all questions we have had. All that said I think what I appreciated the most is his ability to consistently following through on his commitments to communication, information/research and paperwork.Trustindex verifies that the original source of the review is Google.
Shahzad Raza2020-08-09Jeff has been remarkable to work with in finding us our first home. He is incredibly knowledgeable, honest and professional and I appreciated his insights every step of the way. He was very supportive and patient during our search which lasted well over a year and was always early for our scheduled viewings. He has a keen eye for stories that minute details about a house might tell. We put in a few offers with him during our search for a home and he gave us good advice on how we should position ourselves each time. Once we had a successful offer, he made sure we understood all the documentation we were signing and was very responsive in responding to our requests. I'm glad we had him in our corner throughout this process!Trustindex verifies that the original source of the review is Google.
r s2020-07-28I cant say enough good things about Jeff. He was extremely knowledgeable, guided me every single step of the way. He answered my questions before I even had to ask. Kept in touch, and always updated me. I would highly recommend Jeff for purchase or sale of any property. The process was made so easy on me, so much less stressful, all thanks to himTrustindex verifies that the original source of the review is Google.
Elizabeth2020-07-21I feel lucky to have stumbled on Jeff’s page while looking for brokers online. As a first-time home buyer, I was nervous and not sure what to expect. I liked that Jeff mentioned on his page that he provided a complete experience for the customer - exactly what I needed! Jeff was extremely knowledgeable and patient, and I’m grateful that he never pushed me but sought to understand my needs. He never tried to show me properties that were out of my price range but really respected my choices while providing valuable guidance and answering my numerous questions. I would recommend Jeff to anyone on the property market. Thank you so much, Jeff, for demystifying the whole process for me :)Trustindex verifies that the original source of the review is Google.
Christopher Walsh2020-07-04We used Jeff to purchase our home in 2015 at that time we found him to be very knowledgeable and helpful and he found us a great home and negotiated a great price, under asking! Because of this we knew we would use Jeff again if our living situation ever changed. When we decide to sell our home, (May 2020) Jeff was awesome as always. Jeff did a great job marketing our home and it sold better and faster than we could have ever imagined. 30k over asking in 3 days!!! We are currently using Jeff to purchase our next home and even with all the extra work involved due to the coronavirus, Jeff has been able to book all the properties we want to see, while keeping us safe. We will continue to work with Jeff as long as he is in the business. Thank you Jeff!!!
Why is it a Good Idea to Get a Home Appraisal
There are a number of reasons for someone to get a home appraisal, below are some of the more common ones.
- Mortgage refinancing for investment purposes.
- Understand Your Home’s value for planning purposes.
- When you need to sell, to plan your move with confidence.
- To understand how to maximize your home’s value.
- Legal matters such as separation or estate sales.
There are many more reasons one would need to have their home appraised, but those are the most common among Home owners.
How to Get a House Value Assessment
There are a number of different ways to get your home value, below we break down the 3 main ways you can get a value on your home.
A Certified Home Appraisal
An appraiser is an independent, 3rd party company that is hired to do an appraisal on a property for valuation purposes. Although they can be realtors, when working as an appraiser their purpose is to provide a report on an estimate of value.
Unlike the other methods that will be mentioned later, appraisers are paid to provide a report, therefore eliminating any perceived bias… or so that’s the thought. Appraisers are common with lending institutions and in legal matters before the courts such as divorce cases.
Pros of an Appraiser
- You are paying for the appraisal, so that’s what you get. There should be no sales pitch, simply a report provided to you.
- Because they are not selling your home, there is no temptation to tell a home owner what they might want to hear.
Cons of an Appraiser
- There’s no way of telling who the appraiser is, or what their experience is.
- Appraisers are paid relatively low in the real estate field, so they need to do a high volume of appraisals to make a living. This may mean not spending enough time on a property to fully appreciate all things about it that go into the value.
- Appraisers might not have experience in selling, working with clients or selling in your particular area. Real estate is local, and what is common or desirable in one area might not be in another and visa versa.
- Appraisers are people and still subject to their biases. Some have a tendency to value on the low end and actively look for ways to justify a lower value. I have personally seen in my career 2 different appraisals on the same property have upwards of a 15% difference in value. That’s huge! I have also sold properties where the appraisal was 10% lower than the price were able to get for our client.
- There’s an upfront cost you pay out of pocket for the appraisal, normally in the range of $500 for an average home.
Automated Computer House Value Estimator
Over the last few years, a large number of companies have developed automated home appraisals. From techie mortgage loan companies to international real estate companies such as Zillow, these players are promising home owners accurate, no string attached estimates of house value.
Using fancy words like algorithms, data points, advanced technology, statistical machine learning…. These programs are only good as the data they have. Even the largest real estate company Zillow admits home owners should get an appraisal by a qualified professional as their estimates should only be used as a guide.
Pros an Automated Home Appraisal
- Free, quick and easy.
- No need to talk to a sales person, as least initially.
Cons of an Automated Home Appraisal
- They tend to be wildly inaccurate. Computers can only access the data available, which usually means selling price and basic info such as taxes and #’s of beds and baths. They can’t take into account subjective factors such as upgrades, décor, or premiums or other factors that can have a huge impact on value.
- Computer programs don’t sell homes, and don’t know how your home compares against other homes in the area.
- Companies don’t create these programs as a charity. Normally a “free” auto appraisal is tied to you having to talk to a sales person whom is employed by the company or is paying that company for a chance to talk to you.
Realtor Appraisal
The easiest and most effective way to have your home appraised is by having a realtor do a home evaluation for you. Unlike appraisers or computer programs, realtors buy and sell homes, so their first hand market knowledge is critical in properly pricing a home. The key is finding the right one…
Pros of a Realtor Home Appraisal
- With a proven track record and local experience, no one will beat a successful realtor at knowing the market and seeing a high amount of inventory.
- Usually free if you’re a potential seller.
- Will take into account your home’s special features.
- First hand market knowledge – If they work in the area they have seen the competition first hand and know the inventory. To truly understand a market takes years and viewing hundreds if not thousands of homes… which is a full time job.
Cons of a Realtor Home Appraisal
- They want your business. Realtors don’t get compensated by doing free home evaluations. They do it for the chance at selling your home in the future.
- Some sales people can be salesy and try to close you with high pressure sales tactics.
- Since sales people are paid 100% commission, it can be tempting for some to ignore some information and tell the home owner what they want to hear.
- Not all realtors are created equal. All realtors are independent contractors so service, experience and local knowledge will vary widely. This is true even from 2 agents from the same company.
How to Get a Home Value Estimate
There are 2 ways real estate is generally appraised, the cost replacement method and the comparison method. Residential real estate is almost totally done using the comparison method although knowing the cost of replacement on certain items can help provide a more accurate appraisal.
Comparison Method for Evaluating Homes
The Comparison Method for evaluating a home is as simple as it sounds, it’s where you look at similar homes, compare the pros and cons and come up with a price based on that. As a bonus, this is how buyers shop for a home so it’s the easiest and most effective way.
The challenge with the comparison method is what to compare and how to do it. Again, everyone is different in what they value in a home is different, so for the rest of the article I will go over how we at the village guru provide a home appraisal.
The Home Appraisal
Over the years, we have developed a system for appraising homes that is highly accurate, and more detailed than most. How we do this is by answering 2 distinct questions, and then building the appraisal based on that. This has been developed by combining our experience working with both investors and end users to come up with a simple and effective frame work.
Step 1 of a Home Appraisal
Research the current home – this includes age, SQFT, number of beds, baths, tax assessments, and other relevant features,
Define the local area of comparison – this is important as location is the largest factor in determining real estate value and this where many people get mixed up. The best comparable are homes in a similar area. The more narrow the area is, the more accurate the comparison will be. Simply focusing on a town is a not good enough, you need to dive deeper.
- Same neighbourhood, same street
- Same age range
- Same school zone
- Any other boundary that will have a direct impact on value.
Once we define the search area, we do a search for recent sales in the area. Out of this list we keep it to the general big factors – Location, style of home and size.
Step 2 of a Home Appraisal
The next step (which is critical & often overlooked) is that we do a strait comparison based on tax assessments and size to determine a scale on which similar homes are selling. This also includes adjusting prices based on time and market appreciation (or depreciation).
If done correctly, we should be able to eliminate properties from the list that aren’t truly comparable, and come up with a value range of a similar home on the high and low range. This is done before ever looking at the home in person, or comparing upgrades, finished and décor.
Important – by doing the previous step first, you should have a range of what a home could be worth (both high and low) and now it’s about determining where that home will fall on the scale.
Step 3 of a Home Appraisal
Next, we look at the specific details of the homes, and try to find differences and put a price on them. Factors we look at are:
- Amount and quality of upgrades
- Décor style
- Amenities – for example pool, additional structures… ect
- Age and condition of major systems – Roof, windows, exterior, HVAC…ect
Unless we are comparing 2 brand new homes from the same builder, in most cases no two homes will ever be the same. Sone basic guidelines to keep in mind about upgrades
- Most upgrades do not provide a dollar for dollar return on investment
- Certain upgrades are more in demand than others
- Upgrades in some homes may be very desirable while in others not so much
- Buyer preferences can change depending on location and price point
The Home Appraisal
Once we have compared the homes, you should have a good idea of what a home like yours should sell for in today’s market. Armed with this we can now come up with a listing and pricing strategy based on current market trends, to help maximize your selling price.
Final Thoughts on Home Appraisals
I hope this sheds some light on how a home appraisal works. Home appraisals are an important tool that can help us in a number of ways. But while useful, it’s important to keep in mind that an appraisal in an opinion of value, because the only way value is truly set is when a home is sold. Said another way, the value of a home is what a buyer pays for it.
