How Much is Your Home Worth? A Home Valuation Quick Guide
The Portland Metro area has seen historic levels of appreciation over the past 5 years which is leading more and more homeowners to check-in on their home’s value. Knowing the value of your home is important for several reasons, most notably if you’re considering refinancing, making significant upgrades, or selling. So what goes into a home valuation and how do you know if it’s accurate? We recommend using a home valuation tool as a starting point and then setting up a consultation with a real estate agent to determine a more accurate price range.
Automated Home Value Estimators
Automated home value estimators (like ours here) are a great starting point for finding out your home’s value. Estimators are programmed to deliver a price based on a database of property and market data. The data includes property size, age, location and neighborhood, and general market conditions (i.e. inventory levels). What an automated home value doesn’t capture is above average upgrades or the opposite, deferred maintenance or repair needs. Another important consideration is that although homes can be seen as a commodity, they are each individually unique. That value cannot be accurately captured based on comparable properties as no two homes are identical.
The Problem with Zillow’s “Zestimate”
Many homeowners turn to Zillow’s Zestimate feature to check in on their home’s value. Industry experts, including us at Green Buck Real Estate, recommend taking this number with a grain of salt – like any other home value estimator, use it merely as a starting point, not a definite value. Zillow states that their Zestimates have a median error rate of 1.9% for homes that are on the market and 6.9% for homes that are off the market. According to Investopedia, “Zestimates are only as accurate as the data behind them”, meaning it may be working with outdated or incorrect information pertaining to the specific property and neighborhood.
Even Spencer Rascoff, co-founder and former CEO of Zillow, isn’t immune to Zestimate inaccuracies. In 2016 Rascoff sold his Seattle home for 40% less than its Zestimate (inman) and in 2020 Rascoff paid 30% over the Zestimate for a Los Angeles home (Forbes).
Getting A Comparative Market Analysis (CMA)
Agents play an important role in determining your home valuation. One of the most comprehensive and accurate valuation methods is a Comparative Market Analysis (CMA). The process starts with the agent visiting your home and capturing key property information – this helps with adding/subtracting value for items such as upgrades, improvements, home condition, deferred maintenance, and perceived value. With this information, the agent will run an analysis of comparable homes (most similar in layout, location, etc.) and market conditions (i.e. inventory in the neighborhood). With a robust set of confirmed data on your home, the agent will offer a price range that will then be used to aid in the pricing strategy.
Keep in mind that not all selling agents are equipped with the resources or expertise to conduct accurate CMAs. Be weary of agents who are quick to assign the highest price to your home – this is usually a sign of an agent not fully understanding the value in properly marketing a property and creating competition.
Get Started on Your Home Valuation Today
Ready to find out the value of your home? Start by getting an automated home valuation report – just input your address and you’ll be directed to your free report. The next step will be to get in touch with one of our market experts to review the valuation with you and proceed with the CMA process.
If you have any questions about the home valuation process don’t hesitate to reach out! Our team of experts are ready to assist you.