Your home’s current market value depends on what buyers are likely to pay for it in today’s market. Recent comparable sales, location, condition, improvements, current competition, and overall market conditions all play a role.
People want to understand their home’s value for many reasons. Some are preparing to sell. Others are planning ahead, are simply curious about how the market has changed, or need a home valuation for legal or financial purposes.
Understanding what influences your home’s value can help you make more informed decisions, whether you’re moving soon or staying put. Just remember that today’s value may not be tomorrow’s value. Local market conditions can change over time, which is why understanding your home’s value is most useful when it reflects the current market.
What Determines a Home’s Value?
A home’s value is primarily influenced by comparable sales, location, condition, improvements, current competition, and market conditions. Even two similar homes next door to each other can have significantly different values based on the condition of the home, the topography of the land, updates and improvements, and what buyers are willing to pay at that particular time.
While every home is different, there are several factors that typically have the greatest influence on value.
Understanding Automated Home Valuations
Now that you’ve seen some of the factors that influence a home’s value, it’s easier to understand the strengths and limitations of automated home valuations.
Automated home valuations can be a helpful starting point, but they’re still estimates based on the information available to them. Depending on the program, that information may include public records, tax assessments, recent sales, MLS data, or other market information.
What they all have in common is that they haven’t seen your home.
They don’t know about the improvements you’ve made over the years, whether that’s a remodeled kitchen or bathroom, a new roof, updated mechanical systems, or countless other details that aren’t reflected in public records. They can’t see your view, your landscaping, how well your home has been maintained, or how your home compares to other homes buyers are touring today.
It’s also not unusual for different valuation tools to produce different estimates. Each relies on its own data sources and methodology, which is why one program may estimate your home’s value differently than another.
When Is a More Detailed Home Valuation Helpful?
An online valuation can be a helpful starting point if you’re simply curious about your home’s value. However, when you’re making an important financial or personal decision, a more detailed home valuation can provide a clearer picture of what your home may be worth in today’s market.
A more detailed home valuation may be helpful if you’re:
- Thinking about selling your home
- Downsizing or moving to a smaller home
- Buying another home and deciding whether to buy first or sell first
- Settling an estate or handling probate
- Going through a divorce
- Planning for retirement or another major life change
- Interested in understanding your home’s current market value
A more detailed home valuation looks beyond public records to provide a clearer picture of what your home may be worth in today’s market.
How We Determine Your Home’s Value
The type of home valuation most Realtors provide is called a Comparative Market Analysis (CMA). A CMA is an estimate of your home’s current market value based on recent sales of similar homes and current market conditions. It’s different from an appraisal, which is completed by a licensed appraiser and is typically required by a lender as part of the home buying process.
Research the Property and Recent Sales
When preparing a CMA, we begin by looking for homes that are similar in style, size, age, location, and overall characteristics that have recently sold in your town.
Compare the Details That Affect Value
From there, it becomes a process of elimination. Some sales simply aren’t comparable. There may be a home that sold for significantly more than the others because it was extensively updated, or one that sold well below market value because it needed major repairs or was sold under unusual circumstances. Those outliers can distort the results if they’re treated the same as every other sale.
Once we’ve narrowed the list, we look more closely at the condition of each home. In many cases, condition has one of the biggest influences on value. An experienced Realtor also recognizes patterns from past sales. Sometimes a home reminds us of another property we’ve sold or shown, and those real-world comparisons can help put today’s market into perspective.
Interpret the Market and Explain the Results
We also look at homes that are currently under contract to see what buyers are willing to pay today, even though those sale prices aren’t yet public. Finally, we compare your home to the current competition. If your home were listed today, what other homes would buyers be considering, and how would your home compare?
A Comparative Market Analysis isn’t based on a single formula. It’s a combination of market data, comparable sales, and professional judgment. Because professional judgment is involved, two experienced Realtors may arrive at slightly different opinions of value. The goal is to provide the most realistic estimate of what your home is likely to sell for in today’s market.
Next Steps
Whether you’re thinking about selling, planning ahead, or simply wondering what your home may be worth in today’s market, the goal is to provide the most realistic assessment of your home’s current market value.
There is no cost and no obligation. We’ll provide our opinion of your home’s current market value and answer any questions you may have so you can make informed decisions about your next steps.