As we’ve discussed many times before the Real Estate market is just that a market. It ebbs and flows, rises and falls. For the vast majority of Americans their home is their biggest financial asset, and thus it is important to keep an eye on and understand what your home is worth, as well as how that is determined. The only real way to get an accurate home value is to have an agent come visit your home and provide a full market analysis. This is, of course, something we offer all potential sellers at no cost.
In general, the key to understanding a home’s value is to use “comp’s” – short for comparable homes. There are many factors that determine whether or not a home is comparable to yours. The key factors, are similarity of the home, location, and date of sale.
Obviously the goal here is to compare apples to apples. When finding comparable homes, the main factors are number of bedrooms, bathrooms, and finished square footage. However, a good agent will dive much deeper and often go so far as to compare other factors such as upgrades, finishes, quality of work, or other things like a large yard, finished basement, etc.
Location is also a key component in finding homes to compare to yours. We always use a combination of both distance and community. Within a quarter mile is ideal, but an agent may expand that if necessary. However, it is important to find homes within the same community. If not, things like school district, taxes and much more can affect the true value.
The last major factor we use to determine a home’s value is how long ago the home we are comparing was sold. As we mentioned in the beginning, the market is ever changing. Although a home may be an exact replica of yours, even on the same block… if it sold over a year ago, it really cannot be considered as a comp. The market changes too fast, and too often. The more recent the date of sale, the more accurate of a comp it is.
While the only way to get a true value of your home is to get a full in person home analysis by an agent. Sometimes, people like to get an instant home valuation to get a range of what their home is worth. That is why we’ve built a custom home valuation tool that you are free to use. Our home valuation tool is a custom, proprietary algorithm that pulls directly from the MLS. It uses a combination of the factors discussed above and provides you an instant home value range. It also lists the comparable homes that we used so you can compare yourself.