How to Predict the Appraisal Value of Your Home

How to Find Your Home Value in 3 Steps

2. Find the Cost-per-square-foot

While some listings may have the price by square footage, some may not. You’ll want to take the selling price and divide by the square footage to find the price-per-square-foot. For example, a 2,500-square-foot house that sold for $400,000 is $160 per square foot.

Look at several properties, at least three if possible, and get the cost per square foot of all homes.

3. Determine Your Range

Add up the cost per square foot of all the homes you looked at and divide by the number of homes to get the average cost per square foot. Take this number and multiply it by your home’s square footage.

You’re not quite done yet. With this information, give yourself a range of 10 percent in either direction, as home values can quickly change based on nearby comps and the supply and demand of the housing market.

10% = .10 x 385,000 = 38,500

385,000 + 38,500 = 423,500

385,000 – 38,500 = 346,500

Your estimated home value appraisal range = $346,500 – $423,500.

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Key takeaways

The prospect of closing the deal on a sale becomes much less intimidating when you’re heading to market with a carefully researched valuation in your back pocket. Remember, the goal is to sell your home at the right time and the right price according to your needs.

Rebecca Lake

This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, real estate, insurance, or investment advice. Opendoor always encourages you to reach out to an advisor regarding your own situation.

What is appraised value?

A home appraisal is an objective, third-party assessment of a home’s market value. They’re ordered by mortgage lenders to assess the market value and to ensure the borrower isn’t trying to borrow more money than the home is worth. So, the appraised value sets the amount that may be mortgaged for a property.

The third-party assessors who determine the value are known as appraisers. Appraisers often work for appraisal management companies or AMC’s, and they operate in a heavily regulated industry. Licensed appraisers must complete 150 hours of state-regulated education, 1,000 hours of fieldwork, plus ongoing training after they are licensed (hours may vary by state and credentials). The combined classroom and field education prepares them to determine the value of a home.

What hurts a home appraisal

So what negatively affects a home appraisal? Well, some of the most obvious factors include location, age of the home, and materials used to build the home. Curb appeal, recent home improvements, and current market trends can also come into play with your appraisal.

It’s worth mentioning that every appraiser takes a different approach to their home inspections. That said, you can expect your appraiser to look at the value of comparable homes as part of their decision-making.

Tip: Boost your home’s appraisal value

Remember the $500 rule: homes appraise in increments of $500. So, if you can make a repair or replacement (over $500), take care of it. It may be as simple as getting a new appliance or new windows.

Looking for more ways to upgrade your home? Check out our Top Home Improvement Projects article.

My homes value went down. What should I do?

While home values across the board have increased, there could be factors beyond the homeowner’s control that can cause prices to decline.

“Local political issues, climate changes, transportation and employment opportunities — or lack of these last two things — can influence home values,” says Gerard Splendore, an associate broker with Warburg Realty in New York City. “Selling may not be a good idea, unless it is apparent that values will continue to decrease.”

If you can wait out a downturn rather than making a rash decision, that may often be best.

“Home property values are typically influenced by the current economic climate, as well as the supply of houses on the market, which will change over time,” Duffy says. “If you can prolong moving, housing prices will eventually start to rebound.”

What Happens After the Appraisal?

After the home appraisal is completed, the next step is mortgage underwriting. The underwriter reviews the loan file to make sure everything is in order and that all the required documents have been submitted. The underwriter then assesses the risk associated with the loan and either denies or approves the loan based on all the information.

What Home Sellers Need to Know About Appraisals

As a seller, a low appraisal, if accurate, means you may have to lower your home’s price to get it sold. Holding out for an all-cash buyer who doesn't require an appraisal as a condition of completing the transaction is unlikely to net you a higher sales price. No one wants to overpay for a home.

Unfortunately, if your surrounding area has experienced recent distressed sales, that can lower your home’s appraisal value. If you feel that your home’s value has been dragged down by the sale price of nearby foreclosures and short sales, you may be able to convince the appraiser that your home is worth more if it’s in significantly better condition than those properties.

Getting an appraisal is also a required step when giving a home to a family member as a gift of equity.

How to Find the Value of a Home

There are many resources homeowners can use to find out property values.

1. Online tools to calculate  the value of my home?

Homeowners can use a home value estimator tool to learn the value of their house. The digital tools use your address, data from comparable homes in your area, and specific questions about your home, such as features and renovations, to estimate your home’s worth.

2. Get a comparative market analysis

Real estate agents can provide you with a comparative market analysis. This is their estimation of your home’s value based on an evaluation of your property and market trends. This is commonly done before listing a home for sale.

3. Use a house price index calculator

The house price index (HPI) calculator uses data from mortgage transactions over time to estimate the value of a given house. This value is projected based on the purchase price of the home and the changing value of other homes in the area.

The house price index calculator is useful for seeing how much a house has appreciated over time and estimated future changes in mortgage rates.

4. Hire a professional appraiser

You can hire a professional appraiser to assess the appraised value of a house. This appraised value can be used to list the house at an accurate price, refinance, or determine the financial effects of a remodel.

5. Evaluate comparable properties

If you don’t want to pay an appraiser yet, you can research comparable properties in your area to estimate the fair market value of a home. Browse sites with MLS listings to find the prices for homes like yours. Consider square footage, age, condition, outdoor space, amenities, and the number of bedrooms and bathrooms during your research.

Fair Market Value Calculator

Smart homebuyers and sellers know that there are plenty of free tools out there to help determine fair market value, like free home appraisal calculators. Even if the agent or professional appraiser has a number, you can still search for yourself. Look for websites that have MLS listings and search for similar homes. Compare their ages, square footage, amenities and outdoor space.

Zillow offers a free home appraisal calculator. To get started, you simply enter the home’s address. It immediately provides an estimate, and you can see what year it was built, the lot size and other basic information. This can be a good starting point for someone who plans on listing a home.

If you want to find an appraisal for a home that is on the market, you can navigate to a home value estimator like the one from Chase and enter the address in the search box. If it is indeed for sale, the page will show an estimate, the square footage, the year it was built, an estimated value change and an estimated improvement cost. Other tools include a mortgage calculator and an affordability calculator.

How Much Does A Home Appraisal Cost (And Who Pays)?

As a general rule, most single-family home appraisals cost $300 – $400, while multifamily units typically cost upward of $600.

Even though most lenders require an appraisal as a condition of a loan closing, the buyer pays for the appraisal unless they negotiate for the seller to pay instead. The amount that a buyer pays for an appraisal depends on a number of factors, including the size of the home, the home’s location and the amount of property research that the appraiser ends up doing before they issue a final value report on the appraised value.

Keep in mind that if the property is on a very large plot of land, the appraisal cost will be more because the appraiser often surveys the boundary lines of the property to make sure that the listed square acreage is correct.

Buyers can also expect to pay a higher appraisal fee in a very rural area simply because there are fewer appraisers working in these areas. This might mean a longer wait for an appraisal as well. If you have any questions about how much your appraisal will cost, consult with your mortgage lender.

Related Resources

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Appraised Value Vs. Market Value: Knowing The Difference Home Buying – 6-minute read Scott Steinberg – March 08, 2022 Knowing the difference between appraised value vs. market value is key when purchasing a home. Learn more about the role each plays in real estate transactions. Read More

How To Increase Home Value: A 4-Step Guide Refinancing – 9-minute read Miranda Crace – April 13, 2022 Home renovations can help boost your home’s value, but they can be costly too. Learn how to improve your home’s value the right way with our step-by-step guide. Read More

Curb Appeal: 12 Ideas For Upgrading Your Home’s Appearance Refinancing – 6-minute read Emma Tomsich – February 26, 2022 Curb appeal can make a big difference when it comes to selling your home. Here are 12 ways to improve your home’s curb appeal and attract more potential buyers. Read More

Assessed value vs. appraised value

Appraised value and assessed value are not interchangeable. For one thing, don’t expect your county’s assessor to walk through your residence to determine its assessed value. The majority of homeowners want their property’s appraised value to be higher than the assessed value because of tax implications. 

Are you planning to stay in your current home for the foreseeable future? Then don’t be surprised if the assessed value starts to increase over time.

Assessed value vs. appraised value vs. fair market value

When determining the best listing price for your home, you may hear three different terms tossed around: assessed value, appraised value and fair market value. It’s important to understand the differences among the three so you can be smart about deciding how to price your home.

Assessed value

The assessed value of a home comes from the local tax assessor’s office, usually on a yearly basis. It’s the figure they use to determine how much you owe in property taxes. Your home’s assessed value is typically much lower than an appraised value or a fair market value, so it should not be used to determine listing price.

Appraised value

The appraised value is the number your professional licensed appraiser gives you after evaluating your home and reviewing comparable sales. For example, let’s say your home is similar to one down the street that recently sold, but you’ve updated the kitchen. You’ll get “credit” for the updates in your kitchen, and that will be calculated into your appraised value.

Fair market value

Your home’s fair market value is the amount a buyer is actually willing to pay for your home. What a buyer decides to offer is based on a variety of factors, including local market and economic conditions, interest rates, demand, employment and their personal attachment to the home.

Many sellers base their listing price off of what they feel is the fair market value, because it’s the most comprehensive pricing strategy. Depending on the state of your market, sellers sometimes price their home a bit under fair market value in hopes of inciting a bidding war that drives the price up.

How do you find your fair market value? Your real estate agent should provide a CMA that weighs the positive and negative features of your home, as well as local market trends and demand.

Benefits of Knowing Your Home’s Value

Knowing the value of a home can help homeowners plan their finances more accurately. 

If you bought a home for $200,000 and its true market value is now $350,000, your equity has likely increased. You can then use this equity to secure a home equity loan, which can be used to buy a second home, fund a renovation project or consolidate debt. Use the Discover Home Loans Loan Amount Calculator to see how much you can borrow with a home equity loan.

You can also use the new value of your home to calculate your cash-out refinancing options. With cash-out refinancing, you can rewrite your mortgage loan for a larger amount and take that amount in cash. Use the Discover Home Loans Cash-Out Refinance Calculator to input the current market value of your own and learn more about your options.

Alternatives to using a pre-appraisal

If your pre-listing budget is tight and you don’t have an agent to help you determine the fair market value of your home, consider using these tools in lieu of a professional appraisal:

Zestimate

A Zestimate is our free estimated value for an individual home, computed multiple times per week based on millions of data points. It is not an appraisal, but it does provide a ballpark range for your home’s value. Our current median error rate for Zestimates nationwide is 4.5%, which means that half the time, the Zestimate is within 4.5% of the final sale price. For example, if the Zestimate for your home is $100,000, the sale price could be as low as $95,500 or as high as $104,500.

How often should I check my homes value?

While you don’t need to revisit your home’s value too often, checking on it periodically, such as once a year, is a smart move for several reasons. Knowing the current value of your home allows you to determine, for example, whether your homeowners insurance policy still adequately covers the property.

“The value of your home also affects your taxes,” Reed says. “You might be able to lower your assessment.”

It can also be helpful to know the value of your home so you know how much equity you’ve accumulated, which could allow you to qualify for a home equity loan or line of credit, or cash-out refinance.

Of course, knowing the value of your home is very important if you’re considering selling. You’ll know where you stand with buyers, and what you could potentially take home after the costs of the transaction and taxes.

Refinance

Refinance your existing mortgage to lower your monthly payments, pay off your loan sooner, or access cash for a large purchase. Use our home value estimator to estimate the current value of your home. See our current refinance rates and compare refinance options.

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