A lender . . . is managing their risk when loaning money so they will value a home very conservatively.
An appraiser . . . is looking at the property’s highest and best use and valuing the property according to those metrics. However, they may not be looking at a property from the vantage of how the buyer is actually going to use the property.
A real estate agent . . . is looking to create demand in the marketplace. They will value the home competitively to drive enough traffic to the home in order to up the number of bids on the home so that the home sells for the highest possible dollar.
A homeowner . . . has a sentimental attachment to the property and adds that value to their property. But, a new buyer does not have that same attachment and will be more objective when making an offer.
A county tax assessor . . . is only concerned with the tax revenue and comparable properties in the area which may not reflect the actual condition of the home.
Why It’s Important To Know Your Home’s Value
A home is more than four walls and a place to build happy memories — it’s a financial investment. For many, it’s the largest financial purchase that they will make and any attached mortgages are likely to be the largest liability they carry.
Your home’s value and your decisions on when to buy a house and when to sell a house can have long-term ramifications for your total net worth over your lifetime. Keeping a finger on the pulse of the real estate market is critical when you are a homeowner or when you are thinking of purchasing a home.
Knowing your home’s current market value helps you understand your debt-to-income ratio. This number tells financial institutions how much credit you can afford and how much they are willing to lend you.
If you purchased a home with less than 20% down and you are paying for private mortgage insurance, it’s important to know when you have at least 20% equity in your home so that you can finally drop that extra charge.
Real estate investors want to know the value of their properties so they can watch their cap rates and ensure that their investments are still profitable.
Five Ways To Calculate Your Home’s Value
Here are five simple ways to find out how much your Utah home is worth:
A Home Evaluation From Your Utah Realty
A home evaluation or comparative market analysis (CMA) will give you a professional estimate on what you should list your home for in the current market. Our realtors will assess your home against comparable homes in your area that have sold recently. We will also conduct an in-person tour to understand the condition of the home.
With our expertise in valuing and marketing homes in the greater Salt Lake City metropolitan area, we understand how competitive pricing can actually drive up potential offers by bringing more buyers to view your home.
To get a comparative market analysis for your property, fill out this short home evaluation form and schedule a home tour with one of our agents today.
• Your home’s valuation will reflect the current market conditions
• The condition of the property will be accurately assessed
• A real estate agent can help you maximize your return on your home investment
• The recommended listing price may be different from the final selling price
• CMA’s are objective and do not take into account your sentimental value which may affect what you are actually willing to sell your home for
• A realtor is hoping you’ll list your home with them if you ask them for a CMA
Use Online Valuation Tools
Many homeowners use online valuation tools or Automated Valuation Models (AVMs) to determine the current market price of their property. These tools may be available from local lenders, real estate websites, or investment groups.
Online home evaluation tools use property transfers, deeds, tax assessments, and nearby property sales to come up with a mathematical model for how much your home is worth. However, like many automated online tools, the accuracy of their estimate is only as good as the data they have. They do not take into account current market conditions, property conditions, and may be based upon old data or information.
• Quick and easy. Just plug-in your information and you’ll have an estimate
• You can compare AVM pricing and use a median
• Not all AVMs are created equal. Some have high confidence scores from lenders but still may be highly inaccurate
• Does not take property conditions into account
• Used as a lead generation tool where you will be hassled and pressured
Hire An Appraiser
Home appraisers use three factors when offering a valuation on your home:
• Market: Current conditions in the marketplace
• Property: Overall condition and specs of the property. An appraiser will take into account any repairs or upgrades needed that might affect the livability or pricing of the property
• Comparables: Other homes that have sold recently in the area
Appraisers are used by lenders to accurately determine a home’s real value so they can limit their risk when providing mortgages. If a home is valued for more than it’s actually worth, a lender risks losing their money if the homeowner defaults.
While appraisals are extremely accurate as to a property’s value, it doesn’t always mean that the appraised value will match the selling price. Home buyers will often use an appraisal after an offer has been made in order to reduce their final cost. Home sellers however, don’t always need to agree to those conditions and can stick to their asking price.
• A fairly accurate assessment of real market value and how much a lender will loan you for a mortgage on the property
• Home appraisals can alert a property owner to any substandard conditions that may affect a home’s value before listing a property so they can fix those issues before selling the home to get the highest possible price for it
• Takes current market conditions into consideration
• Cost. Home appraisals usually cost around $400
• Doesn’t reflect what the actual selling price might be
• May be heavily influenced by lenders or a home owner’s goals rather than an objective measurement
Use The FHFA HPI Calculator
The Federal Housing Finance Agency House Price Index calculator tracks the changes in home values from sale to sale. This tool looks at current conforming home loans to determine how much the homes are valued in the area.
Use the Housing Price Index calculator.
• Scientific tool that is fairly accurate
• Uses conforming mortgage loan data to calculate your home’s value
• Isn’t adjusted seasonally or for inflation. It will not reflect Utah’s current sellers market conditions, for example
• Doesn’t take into account actual property conditions that might affect final sales price
You can try the ‘Do It Yourself’ DIY model of obtaining comps from local real estate websites and estimating your market value yourself. If you own the current home though or you are assessing a home you would like to buy, consider that you might not be an objective observer who will be impartial when pricing your home.
Many homeowners who choose to sell their home by owner (FSBOs) often take this route and overprice their home. As a result, their home languishes on the market. Increased ‘days on market’ or DOM usually results in lower bids.
If you have some experience in lending or the real estate market, and you can be objective when pricing a home from a potential buyer’s perspective, you might be able to produce a fairly accurate estimate of your home’s value.
• It’s free except your time
• You can use several tools to get an accurate comparison
• Sentimentality can cloud your assessment
• You may not have access to up to date, current market information
• Inaccurate pricing can have a harmful impact on your final sales price by driving down traffic and increasing your DOM
How To Get A Comparative Market Analysis From Your Utah Realty
Now that we’ve discussed the various ways of how to find out how much your Utah home is worth, we’d like to give you a free comparative market analysis. If you are considering selling your home, we’d love to meet with you to discuss our various strategies to help you list your home and get the best possible offer from potential buyers. Call us today at 801.893.8880.