How much is my home worth? It is interesting that we check our yearly bank and financial statements, we check our investment portfolio statements, but how often do we check what the value of our home is; most probably our biggest investment? Investment you say? “It’s my home, it’s where I live! Well…home ownership is a major contributor to a person’s growth in net worth. Net worth is the difference between the value of the assets you own less the amount of debt (liabilities) which you owe. Homeownership can contribute significantly to the growth of your net worth. In fact, for many homeowners their built up equity is the major component of their net worth.
So how do you determine the market value of your home? After all market value by definition is what a willing seller would sell for and a willing and qualified buyer would buy for. Although nothing but an actual sale can determine the specific dollar value of your home, a qualified real estate professional can provide you with a market value range based on what other similar (comparable) homes in your neighborhood have recently sold for.
There are three primary drivers of value: 1) location 2) condition of home and 3) market conditions. Location takes into consideration school district, economic obsolescence (e.g., busy intersection, adjacent to a school, etc.) and positive locational amenities (e.g., Private beach, waterfront, etc.) Condition of the home is how it shows and includes ages of major systems- roof-boiler- AC system-windows-kitchen and baths etc. Market conditions are the drivers of homebuyer activity-mortgage interest rates, employment rates, consumer optimism, and supply/demand; all which translate to a seller’s market or a buyer’s market.
Many online sites provide home valuations via a mathematical algorithm. You insert your address and get a “guesstimate”. These algorithms have no idea of the condition and quality of your home. In certain areas in the US where housing is more homogeneous these “guesstimates” have a lower margin of error because homes were built at the same time and share the same features. However in areas such as Long Island where neighborhoods and homes can be so varied from one house to another, the margin of error can be significant enough to render the “guesstimate” meaningless.
The most reliable method, used by both professional realtors and appraisers is identifying comparable homes which have sold very recently within a tight locational circumference of the subject home and ideally sharing the same school district and amenities. This methodology provide a solid framework to determine a value range for your home. If you do decide to sell, adopting a pricing strategy based on comparable market sales will help insure a successful and timely sale. If you are not selling at this time, understanding your home’s value will provide good information for your personal financial checkup and allow you to make wise decisions for any potential home renovations.
Patricia J. Bretone
Licensed Associate Broker
Daniel Gale Sotheby’s International Realty
Cell: (917) 270-3715
Email: [email protected]