Discussed below are some ways to get a free estimation of the value of your house, followed by some basic appraisal principles that can help you to appraise your own home (DIY).
A newer and high-tech way of getting an idea of your house’s value is by using an online homes for sale site such as Zillow. For most areas of the country, these online services not only have detailed listings of homes for sale and homes that have sold, but also will provide you with a value estimate of your house – even if it’s not currently for sale or been recently sold. They do this by utilizing public record data (especially property tax records and valuations) and algorithms to determine an estimate. Sometimes these valuations are very accurate, other times they are not.
An older and more traditional source for a free estimate is from a local real estate agency. If you use a well established brokerage with significant experience in selling homes in your neighborhood, they can often provide you with a very good estimate of market value. However, they do this to entice you in to listing your home for sale with their agency and if they are not fully ethical, they may give you an inflated value estimate.
One of the most fundamental appraisal principles is that the location of the house is on of the most prime variables that determine valuation. An exact duplicate of your house – same size, age, lot size and so on – in a different area than your house is not going to have the same value as yours. Each area or neighborhood has varying qualities that affect the values of all the homes in it, such as schools, access to public transportation and highways, access to necessary services such as food stores and medical facilities and similar factors. Therefore, it is imperative to use data and information only from your immediate neighborhood or as close as possible.
The ideal would be if your immediate neighbor or on the same block has a house the same as yours and has recently sold it. However, even then there could be significant differences such as lot size, condition of the house, significant improvements, problems with the title of ownership and others.
The main idea is to find a house that is as similar to yours in the immediate neighborhood or area that has recently sold – the more recent the better. Then you have to make adjustments for differences. For example, if your home has a pool and the other home does not, you should adjust your house’s value upward – and if the reverse is true, you would adjust downward. This would also hold true for things like a fully done deck, fully finished basement, upgraded roofing, windows or exterior, landscaping, etc. Also, if the comparable sale is somewhat dated, you would adjust your home’s value upward if home prices are going up in your area, or downward if they’re going down.
Sometimes there aren’t any really good comparable sales available and/or you have trouble ascertaining the true sales prices of these homes. In this case, your second best source of estimating value is to use the listed sales price for houses similar to yours and again as close as possible. Then, you make the same types of adjustment as discussed above. Even if you do have good comparables that have sold, it is a good idea to get comparable listings data as well to help zero in on an accurate estimation of value.
Always remember that a listed price of a house for sale is an “asking price” and usually not its market price. The market price of a house is what a legitimate buyer actually pays for a home in a legitimate transaction. If the home is a distress sale of some sort (such as a pending foreclosure or death in the family), that is not a valid basis for true market value. Also, if the buyer is a close friend or relative of the seller, that also is not a valid comparable sales value.