If you’re a homeowner, there’s probably never been a better time to put your home on the market. After all, The Wall Street Journal reports that median sales prices in Connecticut grew by 15.4% in 2020, setting an all-time record.
Before you list your home, however, there’s one important number you should know: its market value. Finding out your home’s value is one of the most crucial tips for preparing a house for sale as it gives you a starting point for your listing price. And there are a few more reasons for tracking down this figure, including:
Establish a baseline
Many sellers conduct renovations and upgrades in the hopes of increasing their home’s selling price. But if you don’t have your home’s current value, estimating how much these improvements will increase its worth can be challenging. Do note that different renovations yield different returns, with practical upgrades like kitchen remodels offering the best ROI.
Timing your sale
Your goal is to sell your home for the highest possible amount. That said, property values are cyclic, experiencing peaks and troughs depending on market conditions. Keeping track of your property’s value allows you to determine if it’s time to sell or hold.
Update your net worth
Your home is likely your biggest asset, and an increase in its value also means an increase in your net worth. The bigger your net worth, the easier it is to apply for loans with good interest rates—and you’ll likely need financing if you’re upgrading to a bigger home. It’s also useful for understanding how much equity you’ve built in your property. When you’ve reached a point where your home’s value exceeds your mortgage balance, you can take out what’s called a home equity line of credit (HELOC) to finance major purchases.
Ensure adequate insurance
The cost of rebuilding a house after a man-made or natural disaster can be astronomical. Luckily, homeowner’s insurance protects families from financial ruin after a catastrophe. However, if you don’t know your property’s value, how would you know if your insurance policy provides adequate coverage? As your home’s value increases through the years, you should update your insurance policy accordingly.
How to find out your home’s value
There’s no thermometer that can test how hot or cold a property market is. Luckily, there are a few ways to gauge what your home is worth:
Online valuation tools
Perhaps the easiest way to know your home’s current market value is to use an online valuation tool. In fact, Fazzone & Harrison Realty LLC has its own estimator that you can check out here. These platforms use publicly available data such as tax assessments and property transfers in conjunction with location to predict a home’s value. They’re very easy to use, too, requiring you to input just a few details about your property, like its address, square footage, and number of bedrooms. Do note that online valuation tools provide only a ballpark estimate, so it’s not the final word on property value.
Do a comparative market analysis
Like all commodities, real estate conforms to market expectations. You can ask your real estate agent to prepare a comparative market analysis (“comps”) to gauge your home’s value based on what similar properties have sold for recently. Good comps take into account not just a home’s size or number of bedrooms, but also its location, age, condition, and upgrades. Moreover, the data compiled must not be older than six months, as this is the threshold most appraisers use when valuing a property.
Hire an appraiser
Appraisal often happens during the escrow phase, when mortgage lenders ask a professional to verify a property’s market value. That said, sellers are free to hire a professional appraiser to value their home even before they list it. Doing so assures buyers that the listing price is reflective of market value and that they are truly getting their money’s worth. The appraiser draws on pretty much the same data used by comps, but the resulting report is more detailed. Do note that a professional appraisal doesn’t come cheap, costing about $400 on average.
These are truly exciting times for sellers given the favorable market conditions. As the old saying goes, however, it’s best to strike while the iron is hot. If you’re wondering how to sell your home quickly, Fazzone & Harrison Realty LLC has the answer.
We offer end-to-end services, from helping you set the selling price, to offering staging services, to walking you through the closing process. When you work with us, you work with a firm that has 25 years of home-selling expertise.