5 Ways to Determine House Value

Find out what a property is really worth

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A home is many people’s most significant investment. Even if you have no plans to sell yours, knowing how much it’s worth is essential. Not only does the value of your home help determine how much money you can borrow against it, but it likely makes up one of the largest components of your estate.

While getting a home appraisal from a licensed appraiser is usually the most accurate way to determine your home’s value, it’s not your only option. You can use various tools — like online estimators, tax-assessed values and home price indices — to determine your home’s value and help you make decisions about this valuable asset.

Key insights

  • The most common types of real estate values are fair market values established at the date of a home sale, appraised value opinions provided by an appraiser and assessed values.
  • You can determine how much your house is worth using a variety of methods, including getting an appraisal and reviewing tax-assessed values.
  • Your home’s value depends on its location and characteristics, as well as changing economic and market conditions.

How much is my house worth?

There are three common real estate valuations: fair market value, appraised value and assessed value.

Fair market value

Fair market value is how much a buyer pays and a seller accepts when the property is sold. Fair market value is the most accurate representation of how much a house is worth. However, you only know the fair market value of a property once you’ve negotiated a sales contract and the transaction closes.

Appraised value

An appraised value is an opinion of the current market value of a property given by a licensed real estate appraiser. The appraiser uses multiple methods and tools to provide an estimate of how much a buyer would be willing to pay for a home, given current market conditions.

Assessed value

Assess value is an estimate of the property’s value used by counties and other municipalities for property tax purposes. Each government agency has its own methodology for assessing value, but a property’s assessed value usually represents a fraction of its estimated current market value (e.g., 80%, 90%).

Assessed value is one of the simplest ways to determine how much your home is worth because it’s often readily available on county and municipal websites. However, it’s not the most reliable. Since it takes an active sales transaction to know the fair market value of a property, the appraised value is the most reliable way to determine your home’s value without selling it.

How to find out how much a property is worth

There are five common ways to find out how much a property is worth.

Hire a licensed appraiser to value your property
The most reliable way to estimate how much your property is worth is to hire a licensed appraiser. Appraisers use multiple tools to estimate your home’s value and consider your home’s special features and condition relative to comparable properties.

An appraiser also considers the value of your land and how much it would cost to build or replace your home in the current market. Additionally, they may consider how much your home is worth based on the income it could generate (e.g., by leasing it to a third party).

Since appraisers consider specific details about your home and use more than one approach to form their estimates, appraised values are typically the most reliable valuations you can get.

Keep in mind that if you’re going to get a home loan, according to lending law, your lender can’t use an appraisal you ordered. Instead, it must order an independent appraisal.

That said, an appraisal can be helpful if you need a third-party valuation of a home (like for divorce, probate or other legal proceedings). It can also be a good way to determine how much money you might get if you sell your home given current market conditions.

Review your property’s tax-assessed value
If you don’t want to hire an appraiser, you can review your property’s tax-assessed value to estimate its worth. While assessed value methodologies vary, each county or municipality usually relies on a real estate expert to determine how much a home is worth in its jurisdiction. Sometimes these experts are licensed appraisers.

When using an assessed value to determine your home’s value, bear in mind that it might not reflect current market conditions. Additionally, it might only represent a fraction of your home’s estimated market value.

“Some municipalities review [assessed] values frequently, while other municipalities only review them periodically,” Jess Lex, a licensed real estate agent with Keller Williams Realty in Monona, Wisconsin, explained. “In my area property assessments have tended to be below the market value over the last few years. Home values have appreciated so quickly during the several years of a hot seller's market that it's been hard to keep the assessment accurate and up to date.”

Your jurisdiction’s tax assessor can share the methodology it uses to establish assessed values, what percentage of current market value the assessed values represent and how frequently it updates assessed values.

Ask a real estate agent or broker for a comparative market analysis
Before you decide to sell your home, a licensed real estate agent or broker can provide a comparative market analysis (CMA) estimating how much your home is worth in the current market. Real estate agents and brokers have access to information about recent listings and home sales in your area.

Michael Branson, CEO of the reverse mortgage lender All Reverse Mortgage, said you should always get an opinion from a professional about a home’s value, whether you’re the seller or buyer. He cautioned that a “CMA can help inform you when making decisions about buying or selling a home, but it is important to remember that this is not an official appraisal.”

Use an online home value estimator
For a quick estimate of how much your property is worth, you can use online home value estimators, such as those offered by Zillow and Redfin. These valuation tools often use data about similar homes in your area (e.g., recent sales, assessed values) to estimate how much your home is worth.

Different tools will generate different estimates, so use several online home value estimators, and compare the results. This will give you a better idea of the potential range of values for your home.

Identify trends using the FHFA house price index calculator
If you already own a home or know how much it sold for in the past, you can use the Federal Housing Finance Agency House Price Index (FHA HPI) to get an estimate of how much the value has changed. The FHFA HPI provides data on home values in all 50 states as far back as the mid-1970s.

The FHFA HPI calculator estimates a home’s value in the most recent quarter. To use the tool, input the home’s state and metropolitan statistical area (“MSA”), the quarter the home was purchased in and the purchase price.

The calculator uses this information to give an estimated value relative to the original purchase price and the percentage change. For example, it suggested a home purchased in the Tucson, Arizona, MSA sold for $150,000 in the third quarter of 2018 would be worth approximately $258,000 in the third quarter of 2022 — a 72% increase.

The FHFA HPI calculator is the least accurate of the valuation methods, since it only looks at the general change in values in an area over time. Even so, it can be an easy way to gauge how property values in your area have shifted.

What affects a property’s value?

Some of the primary factors that affect a property’s value are:

  • Location
  • Size
  • Age
  • Condition
  • Any amenities or recent renovations (e.g., a kitchen remodel)
  • Current economic conditions
  • Home supply and demand in the area

Sales in the area also affect the value of your home. Joshua Massieh, CEO of Pacwest Funding and Iconic Ventures Real Estate Group, said: “Your home's value has a lot to do with everything outside of your control. I know, I know, you have a nice upgraded kitchen and a nice landscaped backyard, but at the end of the day, the market will dictate what your home is worth.”

Current economic and market conditions affect your home’s value. As Jared Preisler, chief appraiser at DataMaster for Appraisers, said: “A property’s market value reflects the features and benefits of the property in the defined market at a given point in time. Value can be affected by supply and demand [and] the number of buyers and sellers.”

Economic changes — like interest rate changes, the unemployment rate, government stimulus packages and environmental changes — also affect property values. “Market value measures the interaction of all these factors in the marketplace at a given point in time,” Preisler said.

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What is the most accurate house price index?

The most accurate house price index available from the U.S. government is the FHFA House Price Index (“HPI”). The FHFA HPI offers free data on single-family homes in all 50 states from as far back as the mid-1970s.

The most accurate nongovernment-maintained house price indices are the S&P CoreLogic Case-Shiller Home Price Indices, which include up-to-date measures of U.S. residential home prices and home value changes over time.

Are online home value calculators reliable?

Online home value calculators are not entirely reliable, as they generally estimate what your home is worth based on known data on the values of other homes in your area (e.g., recent sales, tax-assessed values). They usually don’t consider specific details about your home, like its condition and special features.

The most reliable valuation you can get for your home is an appraisal from a licensed appraiser.

How much does a home appraisal cost?

Home appraisals typically cost between $200 and $600 for a single-family property but can cost up to several thousand dollars for luxury or multifamily properties. Appraisal fees vary based on factors like your home’s location and size, available data on similar homes and how many residential units your home contains.

You’ll typically pay higher appraisal fees on properties where less data is available (e.g., unique homes, homes in very rural areas) or the appraiser needs to do more work (e.g., examining four housing units versus one).

Bottom line

There are many ways you can determine your home’s value, such as getting an appraisal from a licensed appraiser, reviewing the assessed value, asking your real estate agent for a comparative market analysis, using an online home value estimator or reviewing trends using the FHFA House Price Index.

No matter which method you use, it’s essential to know your home’s value, particularly if you’re getting ready to sell it. While an appraisal offers the most reliable value estimate, other tools can provide a reasonable estimate. Many methods take only a few minutes, so you can use several and compare the results to get a better estimate.

By knowing your home’s value, you’ll be better prepared to decide if you should keep it and when it might be time to sell it.

Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
  1. Federal Housing Finance Agency, “ FHFA HPI Calculator .” Accessed Jan. 6, 2023.
  2. Federal Housing Finance Agency, “ House Price Index .” Accessed Jan. 6, 2023.
  3. Federal Reserve Bank of St. Louis, “ S&P/Case-Shiller U.S. National Home Price Index .” Accessed Jan. 6, 2023.
  4. Nevada Housing Division, “ Home Value is in the Eye of the Appraiser .” Accessed Jan. 6, 2023.
  5. S&P Dow Jones Indices, “ S&P CoreLogic Case-Shiller Home Price Indices .” Accessed Jan. 6, 2023.
  6. S&P Dow Jones Indices, “ S&P CoreLogic Case-Shiller Home Price Indices - Methodology .” Accessed Jan. 6, 2023.
  7. S&P Dow Jones Indices, “ S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index .” Accessed Jan. 6, 2023.
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