What Will My Home Appraise For? Here’s How to Check Your Home’s Value

Here are some common reasons you might want to know your home’s value:

Determining an asking price

How much you could get for your home will likely impact your decision to sell. If you’ve been on the fence about selling, but the appraisal comes back and you realize you’ll make a large profit, it could help you get off the sidelines and enter the market.

It will also help guide your asking price and target resale value. The asking price sets your budget to purchase a new house. Any gains from your sale, combined with savings, help determine your home shopping budget for the next house. With a $50,000 gain on the sale in your pocket, for example, that larger home with a swimming pool or three-car garage could now be within your reach.

The asking price also can determine how quickly your home sells. Tom Cullen is a licensed real estate appraiser certified by the National Appraisal Institute with over 30 years of experience. “A property priced too low will sell too fast, and you will leave money on the table,” Cullen says. “A property priced too high will sit for an extended period of time with little to no activity, and you may miss your window of opportunity to sell.”

Providing insight on whether to make repairs or updates

Knowing your home’s value could impact remodeling decisions. If your home is already at the top of the market for your area, you might not want to put more money into it. Or, if painting the interior would only cost $5,000 but could increase your home’s value by $15,000, you might decide to have this or other repairs done before listing for sale.

In his market, Swartz says, “People have been taking the time to upgrade their house before they sell it because they can see the value in the comps.”

Comps, also called comparables, are recently sold homes in your market that are similar to your home in size, condition, location, and features. This is the method that real estate agents use to deliver the most accurate pricing recommendations to their clients.

Determining your borrowing power

It’s time for a kitchen remodel, but you don’t have the cash to pay for it out of pocket. Home equity loans are a great tool that many homeowners use to fund larger remodeling projects. But before you apply for one, you need to know how much equity you have in your home.

A home appraisal tells you how much equity is in your home as measured by the difference between your current mortgage balance and your home’s value. If you’ve lived there several years, the combination of paying down the mortgage and market appreciation could have raised its value enough to afford that new kitchen.

Clarifying investment value

For many American families, their home is often their largest financial asset. Home equity remains a primary driver to build wealth, and some families count on that equity to fund part of their retirement. If you plan on cashing out equity, or selling, in retirement and want to know if you’re on track, a home appraisal would give you that information.

Estimating tax

Homeownership has tax implications — from the mortgage interest deduction to capital gains tax. Selling a home less than two years after the purchase date could lead to owing capital gains taxes. Perhaps taking out a home equity loan to fund a remodel would help you come tax time since you can typically deduct the interest paid. Knowing your home’s appraised value could be helpful when tax planning.

Assisting with arranging homeowners insurance

If you have a mortgage on your house, the lender requires you to carry homeowners insurance. Even if your home is paid in full, homeowners insurance protects your investment. But how much should you carry?

Homeowners’ insurance policies can cover the full replacement value (the cost to rebuild from the ground up) or the actual cash value (your home’s value minus depreciation). Having your home appraised could help your insurance agent determine the amount of coverage you need.

Estate planning

Whether you’re writing a will or putting your home into a trust, knowing its appraised value helps with estate planning. If one of your children wants the home, but another would prefer a different asset, having a dollar figure for the home’s value can help you balance the distribution of your estate’s assets fairly.

Helping with divorce settlements

When you’re getting a divorce and dividing up assets, you’ll need to know your home’s value. One partner might want to buy out the other partner and keep the home.

The home’s current value determines how much each person is entitled to from the house. It also could help them decide if they want to sell and split the gain on sale, or if one person wants to buy out the other person’s interest in the house. They can do this through paying cash or taking out a home equity loan.

Use online value estimator tools to get an estimate

Today’s array of online home price valuation tools makes it easy to get a quick ballpark figure of your home’s worth. Simply input a few details about your home, push a button, and the website provides an estimation of value.

With HomeLight’s Home Value Estimator, you can get a real-world home value estimate in less than two minutes. Our online tool pulls information from multiple sources and asks you a few simple questions to predict your home’s current value with greater accuracy. Other online tools build their estimates off historical data, which can lag the market.

The algorithms driving these estimators can’t always measure every little detail that impacts your property’s worth. The results could be skewed by incomplete data or fail to account for factors like your home’s positioning on a busy street or its closed-off layout, ultimately providing you with an inflated estimate. There is significant added value in an experienced, local real estate agent’s knowledge of pricing a home as well.

What online home value estimators can’t do

Like all tools, online home value estimators have their limits. They could have incomplete data or data that lags the market. But they also can’t account for differences in homes that impact their values, which can’t be measured by raw numbers.

Cullen points out that these tools “aren’t taking factors into account such as quality, condition, and a mixture of property types.” He appraises homes in New England, where the same neighborhood can have a wide range of property types.

“We may have a colonial style home, next to a ranch style home, a clam shack down the street, and also some commercial influence mixed in,” he says. Each of them would have a different value, but an online tool may treat them all the same.

Some other examples of factors that impact a home’s value that an online tool can’t see include:

• A home’s positioning on a busy street
• A home’s location near public transportation
• Its closed-off layout
• Recent upgrades or improvements — like a new kitchen, roof, or bathroom
• Major changes in the community
• New amenities being built nearby — a swimming pool or new school
• Large employers that recently announced moves to the area

Online home estimates can be a great starting point. And if you know your home is standard for the area, these estimates could be extremely accurate.

All floor plans aren’t equal. Two and a half bathrooms could mean that there is only one bathroom upstairs for four bedrooms. The truth is the floor plan and the function of the home are a very big part of an appraisal, and there is an adjustment for that.

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  Julie Kaczor Real Estate Agent

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  Julie Kaczor Real Estate Agent at Baird & Warner

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  Currently accepting new clients

  • Years of Experience 31
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  • Average Price Point $397k
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Fine-tune your estimate with a comparative market analysis

Before you first meet, your agent will prepare a comparative market analysis (CMA). When putting together this report, the agent evaluates nearby recently sold properties (aka “comps”) that are similar to your own house in size, age, and characteristics to determine your home’s value. It’s the closest thing you can do to mimic the home appraisal process without being a professional licensed appraiser.

It’s also helpful to have them walk through your home and tweak their estimate after they’ve seen it firsthand. “All floor plans aren’t equal,” says Julie Kaczor, a top-selling agent in Naperville, Illinois with over 30 years of experience.

“Two and a half bathrooms could mean that there is only one bathroom upstairs for four bedrooms. The truth is the floor plan and the function of the home is a very big part of an appraisal, and there is an adjustment for that.”

Once they’ve pulled comps and seen your home, the agent could adjust your CMA. It will tell you:

• How your home stacks up against recently sold homes in your area — the number of bedrooms and bathrooms, square footage, garage, or other amenities.
• What homes in your area have sold for recently with adjustments for differences in size and other features.
• If sold homes had updates or other factors that indicated they might be worth more or less than your home.
• How quickly homes have been selling in your area.
• If homes are selling for above or below list price.

The CMA won’t just help you set your home’s list price, it’ll give you a rough idea of how the home sale process might go — everything from potential interest in your home to how quickly it could sell.

Factor in home improvements and upgrades

An appraiser will factor home improvements and upgrades into your home’s appraised value, so you should, too. Provide your agent with a list of improvements, or point them out when they see your home for the first time. But don’t expect to see a dollar-for-dollar return on investment.

James Gargano, an appraiser who has been in the business for more than 35 years, says, “Bathrooms and kitchens, if done well, will always help a house sell and achieve profitability (or return).” However, other home improvements might not put the same amount of money back in your pocket.

The value you’ll get from an upgrade can depend on your area’s climate — a new air conditioning unit matters more in hot climates — and the beginning age and condition of what you’re replacing or sprucing up.

If you’re unsure of the value a repair will add to your home, you can get an appraisal from someone with their finger on the pulse of the market. “Appraisers can, and we often do cost-benefit analysis, which is an analysis of your proposed improvements and the likely yield associated with the completion of those improvements,” says Cullen.

Order a pre-listing appraisal

If you have a unique property or a limited number of comps, consider ordering a pre-listing appraisal. Independent appraisers will evaluate your property — for an average fee of $350 to $550. How much you’ll pay depends on the property’s size, number of bedrooms and baths, and other unique features.

Cullen says that pre-listing appraisals have become more common in his business. Fees range from $500 and scale up, depending on the complexity of the appraisal. “Complex properties (multiple buildings on one site, waterfront, extra lots of land) represent the higher end of the fee structure,” he explains.

While Swartz doesn’t commonly suggest a pre-appraisal, he will in rural areas where one property could have 50 acres, but the property next door has 2-3 acres. “In that case, I might ask the seller to get an appraisal upfront to give us a guideline to go for, see how the appraiser would adjust for those differences,” he says.

A pre-listing appraisal could help set a pricing strategy and justify that price to buyers worried about getting a loan on a unique property.

What to do before the appraiser arrives

Let’s be honest, a clean house will make a better first impression on anyone — and that includes an appraiser. “When I drive up, I can tell right away if someone takes care of their house or not,” says Gargano. “It’s just that feeling that you get.”

My appraisal came in low, now what?

If the bank appraisal comes in lower than the buyer’s offer price, don’t panic. Try one of these options:

• Look for errors in the home appraisal report: Request a copy of the appraisal report — as the seller, you won’t get it automatically. The lender or buyer may be willing to provide it to you, particularly if it came in low. Look for errors that you can challenge. Did the appraiser forget the garage? Is the square footage incorrect?
• Challenge the appraisal with a Reconsideration of Value: Work with your agent on the appeals procedure. Call out issues such as poor analysis of comparable properties or square feet miscalculations.
• Negotiate with the buyer without getting a new appraisal: You can lower your price to the appraised value or ask the buyer to make up the difference. Or, you can compromise by meeting in the middle.
• Request another appraisal: Ask the lender to have another appraisal done, or bring in an independent appraiser. However, you’ll likely have to pay for it yourself and you have no assurance it will come in higher.
• Reduce your asking price: If the home sale falls through due to an appraisal, you can expect other buyers to have the same issue. Keeping your asking price the same would force you to wait for a buyer who has the cash — and the willingness — to make up the difference. Consider reducing your asking price.

You can start now: Find your ballpark estimate and a top agent near you.

HomeLight’s tools take a lot of the guesswork out of selling a house.

Whether you’re trying to decide if it’s time to sell or know that you need more space, it’s easy to get started with HomeLight’s Home Value Estimator.

Once you’re ready to sell, HomeLight’s Top Agent Match tool will put you in touch with two or three top-rated real estate agents in your area who have the connections, experience, and insights to help determine your home’s estimated value and set the best listing price.

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