What we'll cover
Different methods of home valuation
What influences a home's worth
Ways to potentially improve value
Once you have purchased a property it's important to keep an eye on your valuable asset. We'll walk you through how to stay updated on your home's worth and ways to potentially unlock more value.
Understanding home valuation methods
Knowing your home's current worth can help you make important financial decisions like whether you should refinance, sell your home or borrow against your equity. While your home may be priceless to you, here are four different ways to find out how the market currently values your property.
1. Online tools for home valuation
If you'd like a better understanding of a home's current value, you can begin your research online. Depending on the area or type of home you're looking for, various websites can help you locate nearby properties with an estimate of their current market value.
Ally Home teamed up with House Canary to offer ComeHome, a site that allows homeowners to see insights such as estimated home value and your estimated property valuation within the next year. You also can get an idea of the value of other homes in your neighborhood as well as explore active listings.
2. Comparative market analysis
A comparative market analysis, or CMA, is the process of comparing your home to similar homes that have sold recently in the area.
To complete a CMA, you or a real estate agent selects and reviews at least three recently sold comparable homes. Some factors that make a home comparable are square footage, number of bedrooms and bathrooms and amenities like big backyards or garages.
Read more: Is now the right time to refinance your mortgage?
3. Automated valuation models
Automated valuation models, or AVMs, are software tools that consider information about current market conditions to provide an estimated home value. An AVM gives a more nuanced estimate of a home's value, as it factors in sales trends and other data sets that are hard for a person to estimate. Real estate agents, brokers, mortgage lenders and financial institutions may use AVMs to evaluate properties. There are a number of free AVM tools online you could use, including from Realtor.com, but keep in mind these tools will be providing an approximate value — not a guaranteed value.
When considering your home's value, it's important to get as full a picture as possible.
4. Professional appraisals
A professional home appraiser also can provide an estimate of your home's current value. It's important to note that an appraiser works on behalf of your bank or lender — not a real estate agent. An appraisal during the homebuying process or a reappraisal after purchase can give you a good sense of your home's value, as a professional will look at the current condition of your home in person. Any updates or renovations can be appropriately reflected in your appraisal report.
Factors that influence home value
When considering your home's value, it's important to get as full a picture as possible. Think about not just the size and location of your home, but also important features of the surrounding neighborhood. Some factors that can influence your home's value are:
Location and neighborhood
Property size and condition
Recent sales and market trends
Upgrades and renovations
Local schools, restaurants and other amenities
Ways to improve your home's value
While you can't change the location of your home, there are plenty of ways that you can potentially increase your home's value. Think about changes including:
Enhancing curb appeal and landscaping
Making aesthetic updates
Updating key appliances or structures (roof, basement)
Making energy-efficient improvements
Tip: ComeHome offers a home improvement calculator that allows homeowners to see how several projects may change a home's value (cost and value provided by ComeHome are based on location).
Know your home's worth
With a constantly changing real estate market, the value of your home today might surprise you. No matter where you are in your homeownership journey, keeping an eye on your home's value could be helpful.
