Are you thinking about selling your home? Or maybe you just want to know how much you could potentially make if you decided to sell.
Determining the resale value of your home can be tricky, especially when market conditions are constantly changing. In this article, the mortgage experts at Keller Home Loans will explain three different methods you can use to find out how much your home could be worth under ever-evolving market conditions.
Three Ways to Determine the Resale Value of Your Home
Here are three different ways to find out how much you might be able to sell your home for.
1. Check the “Comps”
“Comps” is industry-speak for “comparable sales,” meaning sales of properties that are similar to yours.
Recent sales indicate fair market value by confirming how much a buyer is willing to pay (and a seller is willing to accept) for a specific property. For example, if the house next door to yours has a similar floor plan and is in a similar condition to your own, you would likely see similar sales prices if both properties sold at the same time.
So, to find the resale value of your home, you can look at sales prices for similar properties that have sold recently. This can provide you with a ballpark figure.
Having said that, calculating an accurate resale value is complicated because no two properties are exactly alike. Even cookie-cutter homes with matching floor plans and similar staging are different because they each sit on a unique piece of land. One lot might offer better views, another might have more street noise. These factors can all impact the value of a property.
This means you need to make adjustments to the sales prices of your comps to see how much they would have sold for if they were exactly like your house. But knowing how much to adjust for different factors requires in-depth market knowledge that most homeowners simply don’t have.
This is why many homeowners turn to online home value estimators, which attempt to complete this process for you. They try to use the market data they have on local home sales and the property data they have about your home (from public records like tax assessors and permit offices) to figure out how much your home might sell for.
Unfortunately, because so many factors impact your home’s value, these estimators are often inaccurate. If you’re just curious about your potential resale value, you can get an idea of the value from an online estimator. But if you need to determine the resale value of your home with some accuracy, you should consult a professional, as we’ll do in our next method.
2. Ask a Real Estate Agent for a “CMA”
Real estate agents and brokers have the market knowledge needed to find comps and make the necessary value adjustments to determine the value of your property. Agents “run comps” daily to help sellers determine a list price and help buyers choose an offer price. And, many agents are willing to provide you with a Comparable Market Analysis (CMA) that contains all of this information, free of charge! All they want in exchange is to be considered as your listing agent when you are ready to sell. Simply contact a local agent to request a CMA.
This is a good option for homeowners who may be thinking about selling and need a professional opinion on the resale value potential.
3. Hire a Licensed Appraiser for a Formal Appraisal
For the most accurate determination of the current value of your home, you can hire an appraiser. Home appraisers are licensed professionals with formal training in valuing property. An appraisal is considered to be a formal determination of value, used regularly by financial institutions when deciding to issue a loan with a property as collateral.
For example, if you took out a mortgage loan to purchase your home, your lender likely required an appraisal before they would fund the loan. The lender wanted to have a formal appraisal to confirm that the property was worth the amount you were paying for it since they would have a vested interest as a lien holder in the property. And, if you use plan to get a home loan for your next home purchase, you’ll likely need an appraisal on that new home to secure the loan.
Appraisers charge fees for their service. The rate varies depending on factors like location and property size, but you can expect to pay hundreds of dollars for an appraisal. Therefore, this method of determining your home’s value is best reserved for cases when a formal valuation is needed.
Resale Value FAQs
Is a Real Estate Agent’s Opinion of Value the Same as an Appraisal?
No. A valuation from a real estate agent or broker is an informal estimate. An appraisal is a formal determination of value, as calculated by a licensed appraiser.
What’s the Difference Between an Appraised Value and an Assessed Value?
The appraised value is the formal determination of the value a reasonable buyer would pay for a property. The assessed value is a determination of value specifically for property tax purposes.
These two figures can be dramatically different. For example, some states have limits on how much the assessed value can increase every year you own the property. So during periods of impressive value growth, your appraised value could climb with the market while your assessed value only goes up by a set percentage each year.
Are Appraisals Free?
No. But you might be able to get a free informal valuation from a local real estate agent. Simply contact a local agent, let them know that you’re considering selling, and ask if they can provide a CMA to determine the resale value of your home.
The Bottom Line
When you want to determine the resale value of your home, you can run the comps yourself, ask a real estate agent for an informal valuation, or hire a licensed appraiser for a formal valuation.
And, when you’re ready to sell your current property and buy your next home, Keller Home Loans has you covered!