How Do I Know What My Home is Worth?

How to determine what your home is worth:

Determining your home's value can vary widely depending on the method used, from least to most accurate. Here’s a look:

1. Online Estimators (Least Accurate)

These are widely accessible but rely on public data rather than MLS information and have significant variation between platforms. While Zillow’s “Zestimate” claims to be within 7.5% of sale value, independent reports suggest a wider margin—up to 20%. Plus, homeowners can request adjustments, introducing bias.

2. Broker’s Opinion of Value (Comparative Market Analysis)

This estimate, provided by a realtor, uses MLS data and local market knowledge. It’s generally more reliable than online tools but varies based on agent expertise. It is important to understand the data behind the valuation. Comparing multiple opinions can give a stronger indication of value, though values can sometimes be inflated to win a listing.

3. Professional Appraisal (Highly Accurate)

An appraiser, a licensed professional, reviews MLS data and other factors like comparable sales, which banks use to determine loan amounts. Appraisals generally look back at similar homes sold in the past 6 months. Appraisals can vary—sometimes significantly—as they rely on subjective evaluation.

4. Contract Price (Most Accurate)

The purchase offer a buyer accepts is the ultimate measure of a home’s value, as it directly reflects what someone is willing to pay. This amount may differ from estimates but reflects the real market value at that time.

Using these methods in tandem can help refine your home’s estimated value, providing a reliable framework when listing or negotiating.

Other Factors to Consider

Home values are influenced by a variety of factors, including the time of year and current mortgage interest rates. For example, spring and summer often bring more buyers to the market, which can increase demand and prices. Conversely, higher interest rates can reduce buyer affordability, potentially lowering prices as fewer people qualify for loans at those rates.