What’s Your Home Worth?
By: BankingMyWay.com Staff

By Jeff Brown
At some point, every homeowner wants to know: What’s my home worth? It matters, of course, if you want to sell, if you’re thinking of refinancing or taking out a home-equity loan.

Even if you don’t have an immediate need to know, the home is likely to be your biggest asset. We all like to know what we’ve got. With Internet tools like the ones offered by the National Association of Realtors, Bank of America (Stock Quote: BAC) and JPMorgan Chase (Stock Quote JPM), it has become much easier to get a figure. But these valuations should never be taken at face. A little extra scrutiny will help you refine the number.

Most valuation tools work by examining sales prices of nearby homes, then applying an average to your property. Several factors can give a distorted result.

• The “comparable homes,” or what real estate agents call “comps,” may be too far away. A home exactly like yours may be worth less if it’s in a weaker school district or near a noisy highway, for instance. Or it could be worth more if its neighborhood is more desirable.
• The comp might not really be comparable. It might have the same number of bedrooms and baths as yours, but also a pool or newer kitchen, better landscaping or fresher paint. Of course, the online tool may also use out-of-date data on your home, failing to account for recent upgrades
• Home-sale data may be too old. This is always a risk, but it’s especially important today, because home prices have fallen very quickly in many parts of the country. Sales prices from two years ago are almost certain to be well above today’s values.

Ideally, you should only use sales from the past few months. The problem is that the real estate downturn has made sales so sluggish that you might not find many recent transactions.

It also pays to drive by the comps, to assess whether they are similar enough to your home to be relevant.

One of the better home-valuation tools is found at Zillow.com. In addition to producing an estimated value for your property, it locates the comps on a map and provides a lot of detail about each, including sales price and date, the number of bedrooms and baths and the square footage of the home and lot.

Most important, it calculates a price per square foot for each property. With a little extra work, you can select the properties that seem most like your own, figure their average price per square foot, and apply that to your property.

It also pays to look at asking prices of homes currently for sale, since the sellers and their agents are sure to have thought seriously about current prices. Look around the neighborhood for “for-sale” signs and call the agents for pricing -- or study the Realtor.com listings.

Finally, when thinking about your home’s value, try to see the situation from a buyer’s perspective. Mortgage rates have dropped to astounding lows, according to the BankingMyWay.com survey. That means buyers can borrow more. Use the Required Income calculator to see the income it would take for someone to buy your home.

—For more ways to save, spend, invest and borrow, visit MainStreet.com.

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