How to Evaluate Your Home Value

A home's value can affect its sale or purchase.

The dream of owning a home is alive and well. Whether the economy is up or down, it is important for homeowners to understand the value of residential real estate. Several methods can be used to determine the value of residential properties, however, the most common is the comparable sale technique. "Comps," as they are commonly called, normally dictate the true market value of a home, and this method is generally the basis for property valuation in mortgage approvals.

Things You'll Need

• Spreadsheet software

Instructions

1. Compare your property to recently sold properties near your home. The websites Zillow.com and Trulia allow you to see information about your property and provide information on homes that will serve as "comps." Your home's location is required. On either website, find the link to recently sold properties, and select the data provided. Normally, several example properties are listed. They are used to determine the market value of your home.

2. Paste the comps list of similar properties into a spreadsheet. With the spreadsheet's table form, you will be able to manipulate and analyze the data.

3. Review the properties' particulars. These include addresses, property sizes (in square feet), number of bathrooms, number of bedroom and pricing date. Using these criteria, you can find the properties that most closely match your home.

4. Isolate the properties most similar to yours in the spreadsheet. Normally, the geographically closest properties are the best in terms of comps.

5. Analyze the properties. The single most important criteria is the value per square foot.

6. Calculate the sales price per square foot for each property. The calculation is simply the sales price divided by the number of square feet.

7. Calculate the average price per square foot for all of the properties. The calculation can be derived from a simple average formula in the spreadsheet. This calculation will give you the average price per square foot for properties similar to yours.

8. Multiply the average price per foot by the square footage of your property. This will give you the baseline value of your home.

9. Add or subtract from your home's baseline value using specific attributes of the property. For instance, if your property has a garage but most comparable properties do not, add additional value above the calculated intrinsic value. Likewise, if your property has a smaller lot size, some value should be reduced from its baseline. With the value adjusted for these additions and subtractions, you have a final property appraisal using the comparable sale methodology.

Tips & Warnings

• Watch the real estate market near your property. As homes are listed, visit the open houses and ask for the selling price to get an idea of the current market dynamics and the relative impact those dynamics have on your home's value.

• County courthouses also offer information on property sales prices.

• Never assume that your property is special based on an emotional tie. As with any analysis, the facts must drive the answer. Often homeowners assume a greater value to a house due simply to emotional attachment. In terms of actual intrinsic value, an emotional attachment must be ignored.

References

• Zillow.com: Real Estate Valuations
• Trulia: Real Estate Search