Expert Insights: Are There Standard Ways to Determine How Much a Home Is Worth?
A: Yes. A comparative market analysis (CMA) and an appraisal are the two most common and reliable ways to determine a home’s value.
Your agent can provide a comparative market analysis, an informal estimate of value based on the recent selling price of similar neighborhood properties. Reviewing comparable homes that have sold within the past year, along with the listing or asking price on current homes for sale, should prevent you from overpaying.
A certified appraiser can provide an appraisal of a home. After visiting the home to check such things as the number of rooms, improvements, size and square footage, construction quality and the condition of the neighborhood, the appraiser then reviews recent comparable sales to determine the estimated value of the home.
Lenders normally require an appraisal—which runs between $200 to $300—before they will approve a mortgage loan. This protects the lender by ensuring the home is worth the money you want to borrow.
You can also check recent sales in public records, through private firms and the internet to help you determine a home’s potential worth.