How to Determine Your Home’s Value and Increase It

Understanding the value of your home is crucial, whether you’re planning to sell, refinance, or simply want to know your net worth. Home values are constantly changing, and according to the Federal Housing Finance Agency, home prices in the U.S. increased an average of 9.82% year over year from the first quarter (Q1) of 2019 to Q1 2024. Fortunately, there are several ways to estimate your home’s value, including online valuation tools, working with a real estate agent, or hiring a professional appraiser. Here’s how to get the answers you need.

How to Find Out How Much Your House Is Worth

Start with these three common approaches to finding out how much your home is worth. Each one serves a slightly different purpose.

Option 1: Get an Online Valuation

Several popular sites offer online valuation tools, including Zillow, Redfin, and Realtor. Check your bank or mortgage lender’s website for similar tools. Online tools use public data and a series of algorithms to develop estimates of what your home might be worth. They may be less accurate if your home isn’t currently on the market; even less so if it’s been off the market for years.

Online valuations aren’t always the most nuanced way to estimate your home’s value, but they are the fastest and most convenient. They’re also free.

Best uses: Online valuations are excellent when you want a quick ballpark on your home’s value. You might use one to calculate whether you have equity you can tap with a home equity loan, or compare your home’s potential sale price to the price of a new home you’d like to buy.

Option 2: Work With a Real Estate Agent

A real estate agent can help you prepare a comparative market analysis (CMA) using recent sales data for comparable homes, or comps, in your area. A good real estate agent adds human insight to the valuation process. If you’re planning to sell, an agent may be able to tip you off on whether inventory in your neighborhood is high or low, what buyers are looking for, what’s selling (and what’s not), and a host of other factors that don’t show up in an online valuation. An agent may run comps for you free of charge if you’re considering listing your property with them.

Best use: If you’re serious about selling your home, a CMA gives you a more personalized estimate of the price you might get for your home. A real estate agent can also help you determine what you might spend on repairs, upgrades, and staging to list your property for top dollar, and how much real estate commissions might cost you as well.

Option 3: Hire an Appraiser

If you buy or refinance a home, your lender will require an appraisal of your home’s value. A licensed or certified real estate appraiser can provide an unbiased valuation of your property that includes market trends, sale prices of similar properties, the physical condition of your home, and other factors that may affect your home’s value. Lenders use formal appraisals to help ensure they aren’t loaning more money than your home’s value can support.

Best use: You’re most likely to use an appraiser as part of a loan qualification, though you can hire an appraiser whenever you need an objective evaluation. One example: After inheriting a home, an appraisal can help document the new cost basis for any future sale. An appraisal may also be helpful in a divorce.

How Is Property Value Assessed?

Though property values are assessed differently for different purposes, there is common ground for calculating a property’s value. Here are a few elements that come into play.

Property Basics

Home valuations start with basic information about your home, including:

• Square footage
• Number of bedrooms and bathrooms
• Lot size
• Age and condition
• Special features, such as a swimming pool or enclosed sunroom

Market Factors

Your home’s value is also affected by any number of market factors: national and local home sales markets, mortgage interest rates, the availability of homes in your area, and even your home’s insurability. To estimate the value of your home, valuators look at your property’s basic information and property values in your city or neighborhood. They’ll also consider your home’s sales history and sales of comparable properties in your area.

Methodology

Valuators each have their own methodology. Online valuators use proprietary algorithms to create an instant projection of what your home might be worth. Real estate agents and appraisers look at data but will also tour your home personally to gain firsthand knowledge about your property and use their experience and insight to create an individualized valuation.

How to Increase the Value of Your Home

Although you can’t change market conditions or your home’s location, you may be able to increase your home’s value by doing a few strategic repairs and upgrades. Here are a few ideas to get you started.

Update Your Home’s Finishes

While more expensive renovations may add greater value, relatively inexpensive upgrades to your home’s light fixtures, paint, cabinet hardware, and other finishes can help give your home a modern vibe when your budget is sparse.

Step Up Your Curb Appeal

The way your home looks from the outside influences buyers. Exterior improvements ranging from a new roof to windows, siding, front doors, decks, or even exterior paint can all help your home look well maintained and up to date.

Make Energy-Efficient Improvements

Installing solar panels or a heat pump will save on energy costs for you and any potential buyers. Also consider environmentally friendly upgrades like drought-resistant landscaping or shade trees, which can improve your curb appeal and cut home cooling costs by as much as 30% to 50%, according to the Arbor Day Foundation.

Upgrade Your Kitchen or Bath

Kitchen and bath renovations can be costly, but can increase your home’s value substantially. To increase your chances of turning a profit, keep a tight rein on spending and stick to design choices that appeal to modern buyers.

Add Square Footage

An addition or accessory dwelling unit (ADU) expands your home’s square footage and adds value. If major projects aren’t in your budget, look for opportunities to add usable square footage within your existing home. Find space to create a small office area or finish an unfinished basement to add utility to the space you have.

Clean and Declutter Before Showing Your Home

A clean, uncluttered interior makes a good first impression on buyers. You may also want to consider staging. A beautifully (and aspirationally) furnished home helps buyers visualize living there.

The Bottom Line

Knowing how much your home is worth is useful when you’re thinking about selling or refinancing, when you want to check the assessed value on your property tax bill, when you’re calculating your net worth, and when you’re speculating about the possibilities of upgrading (or downsizing) your residence. You can use online tools, real estate comps, or a formal appraisal to get discrete perspectives, or use a combination of methods to get a range of possibilities.

If you’re planning a home purchase that will involve financing, or home improvements that require a home equity line of credit (HELOC), now is a great time to check up on your credit report and score with Experian. Because good credit is a key to securing favorable interest rates, knowing where your credit stands—and where you may want to work on improving—can help you keep your monthly mortgage payments affordable so you can get the best value for your money.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. Our team of experts is ready to assist you in making the best financial decisions for your home. Don’t hesitate to reach out to us today!