As a homeowner, it's perfectly natural to wonder how much your house is currently worth (and, not so incidentally, how much money you might make if you were to sell it). Even though the internet has brought information about home values directly to our fingertips, not all of it is reliable, not even the opinion of a certified appraiser. Your house is worth whatever a buyer in your market is willing (and able) to pay for it, and that's usually not evident until you put it on the market and start considering offers.
All that said, there are still ways you can assess your home's value without actually putting it on the market. Here are nine things to consider when you're trying to figure out how much your house is worth.
1 - Look at your property tax bill
Your property tax bill isn't an exact estimate of your home's value, but it could be a good jumping-off point and undoubtedly a number that you need to know. Homes in Hillsborough County are assessed annually by the Hillsborough County Property Appraisers office so visit their website to see how they value your property.
2 - Look at the homes that recently sold in your neighborhood
To pinpoint a home's value, most professionals use “comps”. This is just a term for homes that are comparable to yours that have sold recently, preferably within the past three months, but possibly as long as six months ago, depending on how many homes are for sale in your area and how easy it is to find comparable homes. At least three comps should be identified and used to find your home's value, but you can use as many comps as you like; five or six might generate a number that more accurately reflects your home's fair market value.
What makes a house comparable to yours? It really depends on what comps are available in your area. They should definitely be as close to your home physically as possible, and preferably should "look" a lot like your house in the number of bedrooms, bathrooms, square footage, and total lot size. Ideally, the best comps will closely mirror the overall condition, visual appeal, and quality of finish that your home offers.
To find some comps yourself, look up homes that recently sold in your area or neighborhood online. Try to be as honest as possible with yourself; you're not going to get a reliable valuation if you're only looking at luxury homes when your house is not a luxury home, or if you're just considering mid-level houses and yours is a starter home. The recently sold homes should be realistic comparable properties for this to be a valuable exercise.
3 - Look at properties currently for sale
It's a smart idea to look at how many homes are currently listed for sale in your community because this is your direct competition. In a tight market where housing inventory is low, it may actually be more important to consider your competition than to look at what sold three months ago, last month or even last week. Most homeowners have a number in mind when they start this process so act like a buyer, pick your favorite online search portal, set the price criteria and look at the homes for sale around you. Ask yourself as you look at each property within the search "How does my home compare to this one?" If you are realistic with the answers, this will be the most relevant starting point.
4 - Use an online tool
Although online tools for calculating your home's value are everywhere, they aren't always accurate. A real estate robot or computer algorithm can't walk through your home to determine whether the flooring, finishes, appliances and other details are above the market average or below market average. If you live in a development with different builders, who build at different quality levels, you understand that not all square foot is equal, so it's really not possible for a computer to give you an entirely accurate value for your house. Nonetheless, if you want a quick answer, sometimes an online tool is the fastest way to get at least a ballpark range. If you want a better result, use a valuation tool that allows you to customize the details of your home to narrow the list of comparable properties.
5 - Determine price per square foot in your area
Another way to determine your home's value is to look at the average price per square foot in your area, take your own home's square footage, and do a little bit of math. But like many math problems, especially when it comes to home valuations, price per square foot can be tricky, so make sure you're being smart when you use it to calculate your own home's value.
When you're considering the square footage of your home, the best way to think about it is the "gross living area" or "heated living area" of the property. Your unfinished basement (not that we have basements in Florida) isn't really "living area" and neither is your creepy, inaccessible attic, so don't include those spaces in your calculation of square footage.
Additionally, keep in mind that the metric you find is most likely to be the average price per square foot in your market or neighborhood, and averages can skew high or low depending on the pool of properties creating the average. The average price per square foot in a neighborhood in South Tampa is probably pretty high, but if you live in an older, run-down home in South Tampa, the average may not apply as it's being pulled up by all the multi-million-dollar homes in the area. The same goes for the nicest house on the block. If that happens to be yours, then the average price per square foot is likely lower than what you'd be able to get for your house.
6 - Consider the home's age, the lot size, and the location
The house itself is just one part of the valuation equation, although it's an important one. Homes deteriorate over time so making significant replacements like a furnace or roof may be required. Also, depending on how long ago it was built, there might even be some serious plumbing or electrical work to do before it's up to modern standards. (This is one reason why buying or selling historic homes can be a challenge.)
The land that the house sits upon is also critical when you're trying to figure out how much the house is worth, both in terms of its exact location and also in terms of how much land there is. A big lot in a neighborhood with lots of small lots will probably boost the value significantly, and vice versa -- a small lot in an area where the lots tend to run large might not do you any favors, unless it also has some unique aspects like a gorgeous view or access to a body of water.
7 - Be realistic about how your home measures up
Everyone wants to believe that the house where they've been living, breathing, and making memories is one of the best homes in the neighborhood -- and for you, that's true. But is it true for a buyer who has no emotional attachments and has already looked at several other houses just like yours in the past few days, and maybe a few nicer, newer homes?
Remember that ultimately, your house is only worth what a buyer would pay to own it, and delusions about how special it is could undercut your home's actual worth if you end up putting it on the market, overpricing it, then waiting and waiting for a buyer who's willing to pay what your asking. That strategy inevitably leads to price cuts and longer-than-normal days on the market, which make buyers nervous -- they're wondering "what's wrong with it?" and not thinking "what a steal!" So it pays to be hyper-realistic about how your home measures up against the competition, even if the answer is "it's not quite as nice as those other houses on the market."
8 - Order a BPO or a CMA
A BPO is a broker price opinion, and a CMA is a comparative market analysis; you can get either of these documents from a licensed real estate agent, who likely knows the market very well. After all, they list and sell houses every day, so they probably have a pretty good idea of what yours is worth.
You don't necessarily have to sit through a sales pitch to get your hands on either a BPO or a CMA, but you will probably have to pay for a BPO. Many companies that deal in mortgages use BPOs to assess home value, including mortgage securitizers and whole loan investors, so they tend to be more reliable than a CMA. Some real estate agents will send CMAs to their past clients regularly, just to keep them up to speed with what's happening in the market, and it's usually free to request and access one if you're curious.
9 - Talk to a professional
A real estate agent or broker isn't the only person who can assess your home's value. You can also go straight to an appraiser and order an appraisal, but be aware that depending on the demand for the appraiser's time, it could take several weeks and cost a few hundred dollars to get their professional opinion. So an agent or broker might be your best option if you want to save money and you're not interested in selling your house immediately. Developing an ongoing relationship with a reliable real estate agent or broker can be a real advantage to a homeowner. Realtors can help you understand whether the deck you want to add will boost your home's value (and by how much) or give you advice about where to spend your home improvement dollars if you're planning on making some upgrades.
Valuing a house isn't an exact science, but there's a lot you can learn on your own if you choose to. Remember these tips and don't be led astray by online tools or other potentially faulty valuation methods -- ultimately, an expert in the real estate industry could be your best asset for determining your home's value.