• Home
  • Learn
  • Updated: How Much Is My House Worth? A Home Value Guide
Blue House with Small Porch

How Much Is My House Worth? A Home Value Guide

9-Minute Read
Published on May 4, 2021
Share:

There are a number of reasons you may want the answer to the question "How much is my home worth?" You might be interested in selling your home or making home improvements. If you take out a home equity loan or a home equity line of credit, your lender will want to know the value of your home. You may also want to know your home's value for tax purposes.

Whatever your reasons for learning how much your home is worth, let's take a look at home value and its influencing factors, plus how to find out how much your house is worth.

Apply for a mortgage today!

Apply online for expert recommendations with real interest rates and payments.

Start Your Application

What Does Home Value Mean?

Home value, also sometimes called the current market value, refers to the amount of money a home buyer may be able to get for their home if they sell it. On the flip side, it's also the sale price that potential buyers may be willing to pay for the home if it goes up for sale. Many factors affect a home's value, including its location, size, condition, school district, the value of other comparable homes and current market conditions.

Home values aren’t fixed. They can move up and down based on supply and demand. In other words, if you're in a hot housing market with a lot of homes on the market, your home value may be higher. If you're in a cold housing market, your home value may go down.

Why Is It Important To Know The Value Of Your Home?

Homeowners, including potential sellers, need to understand how much their home is worth. It can help you decide whether or not you should:

  • Sell: Knowing the value of your home can help you determine whether you want to sell and whether it makes financial sense to do so. If you plan to sell, knowing your home's value can also help you decide whether you may want to make home improvements.
  • Refinance: Refinancing a mortgage means revising and replacing an existing mortgage loan with a new loan with different terms. For example, you may refinance in order to get a lower interest rate or to switch from a 30-year mortgage to a 15-year mortgage. Your lender will need to know the value of your home in order to determine whether you qualify for a refinance.
  • Tap into your home's equity: Your home equity is the difference between your home value and the amount you owe to your lender. As you can see, in order to understand your equity, you need to know your home value because you need to leave approximately 20% equity in your home. You can access your home equity through a cash-out refinance (a new mortgage with a higher loan amount), a home equity loan (a second mortgage on your home) or a home equity line of credit (HELOC). You can use the extra cash to do any number of things, such as home improvements, consolidate debt, pay for college tuition and more.
  • Negotiate lower property taxes: The amount you pay for property taxes is based on the current market value of your property. You can do several things to try to lower your property taxes but knowing your home value is a good starting point before you go down that road.

Even if you don't have plans for home buying, it's a good idea to know home values because life-changing situations crop up that may require a move.

Types Of Home Valuation

There are a few common ways to evaluate home value. It's a good idea to understand how they differ. For example, you may want to understand the difference between assessed value versus appraised value as well as the appraised value versus fair market value.

  • Appraised value: The appraised value of a home is the value of a property assigned by a professional real estate Lenders order appraisals to make sure that they don't extend loans for more than homes are worth. In other words, this appraisal will determine the actual value of the home in today’s housing market to ensure that the home value is such that the transaction can go forward based on a client’s anticipated loan terms.
  • Assessed value: The assessed value of a property determines a home's property tax bill and influences how much a home will be sold for. An assessor is the person who takes a look at the appraised value and market value to determine the assessed value of a home. An assessor often uses a comparative market analysis (CMA) to make their determination, which is a tool that real estate agents use to compare similar properties.
  • Fair market value: Fair market value is the value of a home (determined by a buyer and seller) and what a home will sell for on the open market. The pressure to buy or sell, characteristics of a property and the local real estate market all combine to determine fair market value.

4 Ways To Determine How Much Your Home Is Worth

How can homeowners estimate how much their house is worth? You can use an online home value estimator, get a comparative market analysis (CMA), use the FHFA House Price Calculator or get a home appraisal. Let's go over each option and how they help determine home value.

1. Use A Home Value Estimator

A home value estimator is a free tool that can quickly help you determine the value of your home or a home you may want to purchase.

The Rocket Homes home value estimator allows you to punch in your address and get an instant report on your home's estimated selling price and time to sell. It also gives you a summary of comparable homes sold recently in your area.

The estimator also summarizes home trends in your area, including the median list price, average listing age and number of homes for sale. It also shares the housing market conditions in your area by tapping into records to compare many homes.

2. Get A Comparative Market Analysis

You can ask a real estate agent or REALTOR® "How much is my home worth?" and they will use a comparative market analysis to help you determine your home’s value. This type of analysis puts comparable properties in your area side by side. These are also called real estate comps.

A CMA takes several factors into account, including:

  • Square footage
  • The number of bedrooms and bathrooms
  • Lot size
  • Location
  • Property age and condition
  • Special features (such as a patio, swimming pool and landscaping)

3. Use The FHFA House Price Calculator

The Federal Housing Finance Agency's (FHFA) House Price Index (HPI) Calculator is another online tool. It can help you understand how the estimated value of a home in a metropolitan-based geographical area (called a metropolitan statistical area, or MSA) may have changed since you purchased it.

The FHFA House Price Calculator helps determine how home value might have changed over time by asking you to input the following information: 

  • State
  • Metropolitan statistical area (in a drop-down menu)
  • Purchase quarter
  • Valuation quarter
  • Purchase price

The calculator then tells the estimated change in value between the time at which you purchased it and what it would be worth today if it appreciated at the average appreciation rate of all homes in the area.

4. Get A Home Appraisal

Getting a home appraisal can help you determine your home’s worth. They’re often considered the ideal way to determine your home’s value. While a real estate agent will provide you with a home valuation based on what they think your home will sell for, an appraiser will tell you how much your home is actually worth.

Lenders rely on appraisers for home valuations because they consider the appraisal process to be more rigorous. Appraisers will run comps just like real estate agents, but they’ll dig deeper into the public records, research more information about your neighborhood and complete a thorough inspection of your home.

Home appraisals tend to cost at least $300 – $400, which is why some homeowners prefer to get the opinion of a real estate agent instead. Even if you do get your home appraised before putting it on the market, your home will more than likely be appraised again when any potential buyer inquires about financing.

Appraisals and inspections aren’t the same. Appraisals help you understand a home’s value, while inspections help you understand a home’s condition. Inspectors will open every door, turn on every faucet and check every appliance. Inspectors examine the structural integrity of your home and the condition of your electrical, plumbing and HVAC systems. An appraiser, on the other hand, looks at the property more generally, including the general interior and exterior of a home and its features.

Apply Online with Rocket Mortgage

Get approved with Rocket Mortgage® – and do it all online. You can get a real, customizable mortgage solution based on your unique financial situation.

Apply Online

How To Add Value To Your Home

There's no question that deciding what can increase home value can be vexing. While homes appreciate over time, there are ways for homeowners to increase their home’s value. However, some home improvements may not do much to increase the value of your home. You might not get your investment back.

Here are a few examples of how you can add value to their home:

  • Update interior finishes: Sometimes a fresh coat of paint makes a huge difference. You may want to consider improving the interior of your home by making small changes. This could mean updating the trim pieces or upgrading kitchen hardware.
  • Upgrade appliances and tech features: Upgrades like new or energy-efficient appliances and enhanced tech features can add value to your home. For example, you may want to install ENERGY STAR-certified appliances or smart home features.
  • Enhance curb appeal: Updated landscaping and exterior features, like adding plants to line your driveway or front porch, can enhance your home’s curb appeal and add value to your property. Consider all the ways you can add to the porch, windows and landscaping.
  • Increase square footage: If you've always wanted to add a third or fourth bedroom, it may help you as you get ready to sell. Adding on to your property, like building a deck or an additional room, can also help increase your home’s value.

You may want to ask your real estate agent or REALTOR® for more insight on how you can add value to your home prior to selling it. They may have some other ideas of how to add value – including how you might want to stage your property – based on your personal situation.

Home Value FAQs

Let's take a look at a few frequently asked questions that many people ask in addition to "what is my house worth?"

What factors affect the value of my home?

Many different factors can influence home value, including the age, condition and size of the property, yard size, comparable properties (comps), the neighborhood and any home improvements you make.

Occasionally, we get a question about betterments and home value: What is a betterment and how does it differ from normal improvements to a home or property? The more you can do to improve your home, the more you can potentially improve its value.

How often does home value change?

Home value changes over time. According to Rocket Homes research, homeowners who have owned their homes for 7 – 10 years see an overall appreciation rate of 46.6%.

Homeowners who purchased 3 – 6 years ago generally see an overall appreciation rate of 22.1%, while homeowners who purchased 1 – 2 years ago see a home value appreciation rate of 16.3%.

Can my home value depreciate over time?

Yes, homes can depreciate over time. For example, your home value could depreciate if you don't properly maintain it. If you let the roof leak, have sewage problems or allow a termite infestation to break out, you might experience depreciation in the value of your home.

You may also experience negative equity, where you owe more on your home than what it's worth. For example, a market decline can cause you to experience negative equity. 

The Bottom Line

If you've always wondered, "How much is my house worth?" or "What is the value of my home?,” there are a number of reasons and ways to find out.

Home value simply means the amount of money a homebuyer may be able to get for their home if they sell it, and it's also the price that buyers may pay. You want to know your home value because you may be exploring the idea of selling, refinancing, accessing the equity of your home, lowering your property taxes and more.

There are different ways of getting at your home's valuation like evaluating the appraised value, assessed value and fair market value. You can get at these various valuations by using a home value estimator, getting a comparative market analysis (CMA), using the FHFA House Price Calculator or getting a home appraisal. No matter which approach you take, a neutral third party should evaluate your home’s value.

Can you increase your home's value? Absolutely! You can increase your home value by painting, upgrading appliances and technology, enhancing your curb appeal and increasing the square footage of your home.

Ready to increase your home's value? You can fund your home improvements with a cash-out refinance. Apply for a cash-out refinance with help from our team today.

 

Apply for a mortgage today!

Apply online for expert recommendations with real interest rates and payments.

Start Your Application
Melissa Brock.

Melissa Brock

Melissa Brock is a freelance writer and editor who writes about higher education, trading, investing, personal finance, cryptocurrency, mortgages and insurance. Melissa also writes SEO-driven blog copy for independent educational consultants and runs her website, College Money Tips, to help families navigate the college journey. She spent 12 years in the admission office at her alma mater.