How to Determine Home Value & Why It Matters

If you decide to sell your home or if you need to get home insurance, there are steps to follow. First, you need to find out the value of your home. Determining the value will help you sell or protect your home accurately.

 

It is vital to know that homes can depreciate over time. What you paid for your home may not be what it is worth today. The value of the property is essentially what an informed and willing buyer would pay for the home.

 

The Value of a Home

Generally, a home or property has three values: the seller's value, the buyer's value, and a professional appraiser's value. The goal of a successful purchase is to get the three to align. Home values tend to be subjective and they change from time to time.

 

Understanding how home values are determined will help you make a sound investment. It is vital to do your research before buying a home or putting your house on the market.

 

Factors That Affect Home Value

Several factors affect the price or value of a home. While age matters, the condition of the home is even more important. Other factors include the size of the house and the home’s location.

 

A smaller house in an ideal location can be more valuable than a larger home in a less desirable location. Renovations can also increase the value of the home. It is important to ensure that you make the right renovations.

 

Home Value and Insurance

The value of your home plays a vital role in getting the right home insurance. Standard policies will insure the home for the cost that it would take to rebuild in the event of destruction. When determining the dwelling coverage, the insurer will consider factors such as size and cost of materials. You need to consult a professional appraiser and an insurance agent to determine the right coverage for your home. 

 

Determining the Market Value

The market value of a home has a close relationship to the prices that have been paid for similar homes in the location. This is known as value based on comparable homes. Comparables or comps are similar and recently sold homes that appraisers and agents use to determine home value.

 

Comps help buyers determine an offer price and homeowners find out the value of their property. Agents use comparables to come up with a listing price for the property that they need to list.

 

Calculating Home Value

Several criteria are considered when calculating the value of a home. The timeline is an important consideration factor. The comps will include property sold in the last three to six months. These should be homes in the same neighborhood or close to the property in question.

 

The comps include houses of similar size including square footage, number of stories, number of bedrooms and bathrooms, and lot size. The age and the features or amenities of the homes being compared will be considered.

 

There are consequences of incorrect home valuing. They include overpaying, low appraisal, and missing sales opportunities. It is important to find out the true value of your home. 


 

To learn more about determining a home’s value or to schedule an appointment, call Blue Horizon Realty and Lending, INC at our office in Escondido, California at 760-237-4092.