Selling, refinancing, and buying a home all depend on the home value; without an accurate figure, you could end up losing your financing or even losing money on a potential sale. Before you jump headfirst into the process based on the values you see posted online for your home, consider the best ways to estimate the value of your home.
Online Values are an Estimate
Using the online tools available to determine the value of your home is a great starting point, but it should never be used as a concrete answer when you are actually going through the process. For example, if you want to see what homes in a certain area are selling for or if you want to see if there is a remote chance that you have equity in your home and can refinance, you can use these tools. If you are about to put your home on the market tomorrow or you are serious about buying a home, however, these tools should be used very sparingly.
Estimates from Realtors can Vary Too
The truth of the matter is that even values provided by realtors can fluctuate. If you shopped with three different realtors, for example, you would probably find that you get three different values. Different professionals choose to use different comparable homes, which is often the largest discrepancy in the difference in the values. There are also differences in the thoughts about the value of certain features of a home. While a majority of the value of a home is based on fact, a small portion is based on opinion as well.
Find Accurate Comparable Homes
The first step is to find accurate comparable homes that are very similar to your home. If you have a “cookie cutter” home that is just like many other homes around it, this is not a big deal. On the other hand, if you have a unique home with many different features than the surrounding homes, it might be harder to find those comparable homes to use for your value. In addition, if you live in an area where not very many homes have sold lately, there is not as much data to use as far as determining the value of your home.
The Best Way to Find your Home Value
So with all of the uncertainty in the valuation of a home, how are you supposed to find an accurate number? The best way to go about it is to take the best of both worlds. Use a few online tools, such as Zillow and Redfin to see what types of values they come up with and if they are within range of one another. If you notice that one is much higher than the other, then you obviously have some erroneous information coming in from one of them. The next step is to figure out which one is closer.
The best way to determine between two online valuations is to use a professional realtor or even an appraiser, depending on how serious you are about needing a value. If you are just trying to play with numbers to see if you should refinance or not, talk to a local realtor about the values in your area to see which number is more accurate. If you are serious about buying or selling, however, you should use the services of a professional appraiser that will be able to tell you exactly what the value of the home is so that you know where you stand.
The largest discrepancy in any home value is usually the scope of the home. For example, if the public records show that a home has 3 bedrooms, when in fact, it has 4, there will be a large difference in the value you are provided. The same is true if you made a large number of upgrades to a home but they are not reporting or the comparable homes that were used do not have the same upgrades.
There are a large number of factors that play into the home value, each of which needs to be looked upon individually. Using all of the numbers available to you is the best way to get a ballpark estimate of what your home or future is worth to help you make the right decision.