How to Determine the Real Estate Value of a House
The value of real estate is determined by what the market will bear at that time. You may, however, want to find the value of your home before it goes on the market. You also may need to know the value if you are thinking of refinancing your current home loan. There are a few ways to determine the value of your home before it goes on the market. You can do the research yourself, talk to a Realtor or hire an appraiser.
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Instructions
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Determining Value
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Create a list of about five homes that are comparable to yours and have sold in the past six months in your neighborhood. Consider the overall square footage, lot size, number of bedrooms and bathrooms, and the condition of the home. You can compile this list by visiting the open homes in your neighborhood and following through once the sale is closed by asking for the sales price. You can also use a real estate website that lists sales prices, or ask a local Realtor to put together a CMA, or a comparative market analysis.
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Find the average of the five homes by adding the five sales prices together and dividing the total by five. Calculate for the average square footage as well. That way, once you have found the average sales price and know what the average square footage is, you will know if your home should fall above or below the average sales price based on the square footage. List the five homes according to value and see where yours should fit in using the home's features as a guide.
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Follow recent sales trends. If the market is slow or on a downturn, you may need to take a percentage off of the final result based on falling real estate prices. If the market is on the rise, you will add that percentage to the sales price. For example, find the average, and add five percent if real estate prices have gone up five percent in the past six months. In a fast market, you may only go back three months looking for comparable sales.
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Hire an appraiser. An appraiser will put a list together of comparable sales, but he will also visit the home and give a specific value to each feature in the home. He will give you a report after doing the research which will include the current market value of the home.
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Tips & Warnings
Talk to a local Realtor and have her put together a CMA. The Realtor should be familiar with all of the homes on the list as well as all of the latest trends which will help her accurately determine value.
Remember that an appraisal does not ultimately determine value. The price somebody is willing to pay for your home is what actually gives it its value. Use the appraisal as a guide, but remember that the market may bring more or less than the number on the report.
