How Much Is My House Worth?

There are a few reasons to be interested in finding out the value of your home; refinancing your house, putting it on the market to sell, purchasing replacement value home insurance or just plain curiousity.

You can get an estimate of your home's value using an online service such as Zillow.com. While this may not be exact, using this service can help you get a ballpark figure.

When Knowing the Value of Your House Is Important

There are a number of situations in which you may need to know the value of your home:

• If you are refinancing your house, you need to know the value of your home so you know how much equity you have and so the bank can ensure that the home is worth enough to give you a loan for the value you need.
• If you are purchasing "replacement value home insurance," you will need to know how much it would cost to rebuild your home from scratch so that you can determine the appropriate amount for which to insure the home.
• If you are putting your home up for sale, then you need to know what price to list your home on the market.

Alternatively, you may just want to know how much your house is worth for curiosities sake.

Refinancing and Your Home's Value

If you are refinancing your home, the bank will want to ensure that your home is sufficiently valuable to act as collateral for the entire amount they are lending you. As such, the bank will usually require a formal appraisal be done on your home before they give you a loan. You will normally be responsible for paying the cost of this appraisal, which can be anywhere from $100 to $400 or more depending on the size of your home.

A professional appraisal is one of the most exact ways to find out how much your home is worth. The appraiser will compare your home and its features to other homes that have sold in your local area and, using statistical data and information, will make a professional guess or estimate as to your home's value.

Insurance and Your Home's Value

If you are purchasing replacement value home insurance, as opposed to market value home insurance, you need to determine how much it would cost to build your actual house again. This number can be very different than the market value- which is the amount your home would sell for- and can even be different than the appraised value. The discrepancy comes when property values have fallen, or when you have installed unique items that do not add a lot of equity to the home, such as extremely fancy showers or bathroom fixtures or anything else that wouldn't add a lot to the actual resale value of a home.

To determine your home's replacement value, you can consult with your insurance agent. Many insurance companies also include forms to help you figure out replacement value. Speaking to a builder to find out the cost per square foot to build a house similar to yours, and also asking about the cost to replace any special features, can also help you determine the appropriate replacement value to use when you are insuring your home.

Resale and Your Home's Value

Selling your home really allows you to find out its worth, since a home is worth only as much as someone pays for it. Your real estate agent will normally price your home for you, based on his experience and on other recent home sales in your area. If the home does not sell for the listed price, you may need to drop the price until you find an interested buyer or you may need to accept a low-ball offer if you have to move quickly.