How is Your Home Value Determined

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07/11/2022

 
 

Have you ever wondered how a house is valued? Is Zillow accurate?

It’s both an art and a science when it comes to placing a value on a property. Factors like location, demand of that local market and condition of the property can greatly influence the value of the home. A good realtor will pull a list of recently sold properties, currently pending properties and active properties to see where your home will stack up. 

Fun Fact: Commercial Real Estate isn’t valued this way. Call me if you want to learn more about this.

A lot of people reference Zillow’s “Zestimate” for understanding the value of their home. Zillow is not wrong all of the time, but its estimates can be off by quite a bit. I personally prefer HomeBot, which I provide free to any of my clients. Click here to sign up for it. If you live in a production builder neighborhood where many houses look the same and quite a few houses sold recently, Zestimate will be a very reliable number. For all other situations, it takes more nuance to determine an accurate value of your property.

Here are 3 things I consider when placing a value on a property:

Comparable sales “Comps”

There is no exact science to choosing comparable homes to help determine your home’s value. How I go about it depends on the location, style of home and age of home. If you live in an area where there are many similar houses and lots of sales recently, I’m going to use those sales to come up with a value. If you live in a more unique home or in a remote location, this is when I have to look at a variety of characteristics to determine a value.

Condition of home

The condition of a property can vary drastically and it takes more speculation to determine where a home is on that spectrum. Ask yourself, does this house have curb appeal, is it clean on the interior, have we been putting off making upgrades, what kind of deferred maintenance do we have?

The first thing I look for is the age of the roof and major appliances. If you don’t know how old your appliances are, there should be an install sticker on your water heater, furnace and AC.

Advice I received on staying up with maintenace was from a friend of mine and he told me last year, “if you try to update one thing a year, you will always stay on top of it.” Obviously that’s easier said than done, but it’s a good goal to have.

Have we been ignoring our landscaping and now it’s overgrown with weeds? This is a cheap and easy fix. 

Competing houses

The last thing I look at to dial in a final number is the other active homes that would be competition to yours. You don’t want to be in a position where your house is priced higher than another house on the market that is also in better condition. If your condition is slightly worse, you want to be priced right under that competing house.

There are many factors that determine the value of a property and this is a general overview of my process in helping determine value.

Click here if you want to discuss selling your home.