A home’s value is a big factor for homeowners who are determining whether to sell their home. This may be the case for you as well—you’re looking at homes to buy and want to know how much you will be able to make on your current home. Like some homeowners, the estimated value of your current home and how much you will make on the sale will decide the price range you can afford for your next home.
Keep in mind that the value of a home can be difficult to accurately assess, so no single estimation is going to provide you with a clear idea of what you will make on your home. “Opinions of value, there are a lot of them,” says Stan Humphries, Chief Analytics Officer for Zillow, which pioneered the practice of estimating and publishing home values in 2006. “If you were to sell the same house 100 different times with different buyers and sellers, it would close at a different price.”
With that said, here are some of the basic evaluators that go into deciding your home’s value when you are ready to sell. Through a little research, it’s possible to come up with an estimate of what your home may be worth—information that may help you decide whether you are ready to sell.
What are “Comps”?
When determining the value of a house, an appraiser or agent will look at comparable sales, or “comps.” Typically, he or she will find three similar homes to yours in the same neighborhood that have sold recently. Now it’s possible for you to do this research yourself and come up with an estimate of your home’s value.
The properties that have been sold already are the key. To determine your house value, you need to find homes that are similar in size, condition, and location. The theory behind value is that your home is worth whatever others would be willing to pay for it – and the best way to determine how much people are willing to pay is by discovering how much they’ve paid for similar homes.
The database where you can find similar homes to yours that have been listed “for sale” and already sold is called the Multiple Listing Service (MLS). Agents and appraisers have access to this database, but you may have a more difficult time accessing this information. However, there are resources where you can get an idea of comps for your home, which we will describe in the next section.
Another way to find out comps for your home is to ask your real estate agent, who can supply you with a list to help you as you go about determining your home’s value.
How Do I find Comps for My Home?
To find comps for you home, there are several online options you can access for information. Below is a list of both free and pay sites that will help you gather the information you need.
Free House Value Sites
Zillow.com – Zillow is a biggest player in the online comps game, through a feature called a “Zestimate,”—an automated estimate based on public records and sales comps. You can also search for “sold” listings to determine your own comps.
Trulia.com – Trulia is similar to Zillow in that it allows you to search “sold listings” to gather comps.
Redfin – An online brokerage with online property valuation tool which will help you find your home’s value.
Realtor.com – Realtor.com allows you to search for your home’s worth by showing what houses sold for in your area.
Property Shark – Property Shark is a source of free public data on properties—recent sales, sale history, and comparables. You are not required to enter your contact info.
Pay Property Value Sites
If you want more detailed information on your property’s value, pay services like RealQuest provide more in-depth, useful data on a property. Basics include the following:
- Property Detail Report
- Comparable Sales
- Parcel Map/Assessor Map
- Street Map
- Neighborhood Information
- Legal and Vesting
- Automated Valuation (AVM)
- Transaction History
- Custom Searches
- Flood Maps
Is Your Home an Outlier?
Even with plenty of data on other homes sold in your neighborhood, it may be difficult to get a firm and accurate picture of what your home is worth. It may be less accurate if you home is unique in your neighborhood without similar homes to compare it with—your home may be an outlier.
New online automated estimators are also struggling with homes that are outside of the norm. “The more the house is an outlier, the more difficult it is for anyone to price it, whether it’s a human or computer,” says Glen Kelman, CEO of Redfin.
It will also be more difficult to assess if very few homes have sold recently, since the market fluctuates often. On the other hand, if there are many recent home sales in your area, you will have more data to work with and will get a more accurate estimate.
Remember: Opinions and Estimates Vary
Even armed with lots of data on comps and results from online estimators, there can be a lot of variation. Not only will automatic home estimators vary, but the opinion of real agents will vary as well. You may talk to 3 or 4 real estate agents who will all give you a different number. Everyone, whether a human or a computer, will have a different idea about which homes are the most comparable to yours.
Any estimate of your home’s value, whether by a human or computer, is just that—an estimate. Take the numbers and opinions with a grain of salt. Gather your information to get a general idea, but be careful putting too much weight on it. In the end, what your home sells for is going to be a mix of where the market is, how motivated you are to sell, how much the buyer wants your house, and the negotiation between the two of you and your agents. The best-case scenario is when both buyers and sellers walk away from the table happy with the results of the sale.