What's my house worth?

When looking to refinance, many borrowers ask the question, "How much is my home worth?" The most accurate way to determine the value is to get a professional appraisal done on your home.

To get an accurate appraised value, an appraiser will use several methods. The most common way is the sales comparison approach. The appraiser will look for similar properties that have sold in your area within the past 1 year (typically). Adjustments will be made, depending on what your house has or doesn't have compared to the other houses.

There are many online automated home valuation programs out there that can provide you with an idea as to how much money your home may be worth at that time. Most of these services charge a small fee, yet there are some that remain free to use. This is not a guaranteed value of what your home is worth, but a simple estimate of your home's value. The only way to determine a more accurate value of your home is to have an appraisal done by a licensed appraiser. Consult your mortgage professional to find a quality appraiser near you or to find an automated online valuation system.

A C.M.A. or comparative market analysis is the next best thing to an actual appraisal. Using properties of similar size and structure that have sold in recent times, a person can estimate what the value of a home may be based on that. However, a CMA cannot replace an appraisal or define value accurately enough.

If your home is located in a planned community where all the homes are similar, the appraiser will have a simple job to compare the home against each other and recent sales. Most homes in a track are what they call "conforming" and don't deviate much. On the otherhand, if your home is in an area where there are very few like yours, then you need an appraiser that will work hard to get you good comparable sales. For example, say your home is on 1 acre and the closest home like yours is 5 miles away. Some appraisers will give up after searching out 2-3 miles. You need to review the comps to see if the homes the appraiser selected are indeed good comps.

In many areas of the country, home prices have dropped slightly. At the same time the number of homes for sale is up, so it is taking longer to sell homes. So, your home may be worth one amount if you can wait 4 to 6 months to sell your home, and worth a lower amount if you want to sell it in 30 days or less.

An appraisal or a CMA will get you in the ballpark, you need a buyer that is willing to spend money on your house. If you don't receive any offers you may have lower your selling price.

Pay attention to the sales prices of other homes in your neighborhood. When an appraiser is determining the value of your home, he will look for the closest, most similar houses that have sold recently. Assuming your home is in the same condition as your neighbor's homes you can usually closely estimate the value of your home based off of the sales price of your neighbors.

» DISCLAIMER: The information contained in this article on 'What's my house worth?' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.