It’s Time to Estimate the Market Value of Your Home
We’ve all been avoiding the scary task of checking on the current market value of our home. We have read that the median price on sales of existing homes fell 13.2% in one year, the biggest drop in 40 years. We also know that new housing starts in November were 624,000 units, down from 1,178,000 units a year ago. (Source: Barron’s) All of the housing news is bad except for mortgage rates which have fallen.
Mr. ToughMoneyLove thinks it’s time for all homeowners to face the music and find out what has happened to our own home valuations. The numbers won’t get any better if you avoid looking at them. I promise.
Home equity is often single largest component of a family’s net worth. Therefore, it is in our best interest to learn if we have any equity left and if so, how much. Then we can use that information to see how our personal balance sheet is looking. The beginning of the year is a logical time to do this.
So how do we estimate the value of our home without actually selling it? Well, you could ask a Realtor to do a property valuation analysis for you. But actually, you can use the same information and do it yourself, in the comfortable glare of your own computer screen.
These are the home valuation sites that I like:
Zillow allows you to enter in your home address. If you live in a reasonably sized town, city, or suburb, it will find and map your house, pull up publicly available information about its size and prior sales transactions, find comparable sales in your area, and generate an estimate of its value. You will also have the opportunity to “claim” your home and customize information by editing or adding details of the size and design of your home. This can be important. For example in our case, Zillow had our home listed with 6 bathrooms and no bedrooms. (I think this is because we had the house built from custom plans. Therefore, the only prior sale of record was for the bare lot.) When we corrected that information to 5 bedrooms and 4.5 bathrooms, the valuation changed accordingly.
Home Gain is similar to Zillow although it provides a valuation range instead of a single dollar valuation estimate. It has a very clean user interface and includes lists of comparable sales and recent sales in your neighborhood when it displays the valuation range.
Trulia does not provide individual valuation estimates. However, it does contain extensive data on market trends for home sales and valuations in your geographic area. This would be helpful if your home was not identified in either the Zillow or Home Gain databases. I would supplement the data from Trulia with comparable sales information from Realtor.com. I would then use that sales data to arrive at a valuation range based on actually selling prices per square foot.
So it’s time to put on the big boy (or big girl) pants and find out what has really happened to the real estate portion of our financial empires. If it helps, avert your eyes when the number first pops up but finally take a look. Then resolve to do it again in 3-6 months. Actually, when that home value number starts climbing, it may give you a better feeling about the rest of your financial life.
Image credit: Svilen Mushkatov