Home values are sliding in much of the country, as a result of the declining real-estate market and credit crunch. Yet research indicates most people still think their home is worth more than it is.
How, then, can you get a realistic idea of your home’s value if you’re planning to sell, refinance or borrow against your equity?
First, recognize that the median value of existing homes nationwide dropped 4.6 percent nationwide between January 2007 and January 2008. That’s according to the NATIONAL ASSOCIATION of REALTORS® (NAR). One major reason for this decline is a slowdown in sales in high-cost markets.
On the other hand, year-over-year median prices rose in roughly half of U.S. metro areas, NAR said. The group’s chief economist, Lawrence Yun, speculated that some markets where home values had been weakening might have “turned the corner.”
If you’re in a metro area, you can check what’s happening in your market by researching existing-home sales through NAR’s research reports.
Searching real estate listings and visiting open houses in your neighborhood can also help you get a feel for your local real estate market. Pay attention to what happens to those listings. Homes that stay on the market more than three weeks might be priced too high.
If you’re serious about getting a realistic home value, an independent appraisal may be your best option. An appraisal can cost a few hundred dollars, but your lender is likely to require one anyway if you want to access your home’s equity. An appraiser will look at your home and a variety of market data to determine its value.
If you’re planning to put your home on the market, one of your best home-valuation tools is a comparative market analysis. A REALTOR® compiles data about recent listings and sales in your neighborhood to help determine your home’s current value. The most reliable data will be for homes similar in size and features to your own.
The key word here is “current.” If nothing else, recent housing market fluctuations have shown that property can be worth one amount one day and something else the next.