Keeping up with home values in your neighborhood can be a daunting task. After all, if you try to be an informed homeowner and follow along with prices by looking at any of the “consumer-friendly” sites like Realtor.com, Redfin, or Zillow, you’ll find that their automated valuation formulas come up with a totally different range of prices on each site for a given address. They use different comparable sales; some use active listings while others don’t, and some give a range in prices so wide that it simply doesn’t provide any useful data to determine if you have leverageable equity or if your home has appreciated at all.
Ultimately, one of the best ways to stay in tune with your home’s valuation is to keep an eye on the sales happening in and around your neighborhood, ideally within a mile or two of your home. If you live in a neighborhood surrounded by many homes with similar square footage, lot sizes, and architectural features, then defining comparable sales is much simpler. If you live in a 3-bedroom, ranch-style home that is 2000 SF, and the house down the road has 3 bedrooms, a ranch floor plan, and is about the same size, you can bet that your home’s value will be directly impacted by that sale, for better or for worse. Appraisers should adjust valuation based on size, condition, and updates, but to get a ballpark estimate for your home’s value, look no further than your neighborhood’s recent sales.
If you live in a home surrounded by acreage, or perhaps in a home that is so unique that there is nothing like it nearby, pulling comparable sales can be tricky. The only way to determine fair market value is to look outside of the immediate neighborhood to attempt to find the most similar home that you can, as close as possible. Maybe the nearest custom-built log cabin on 5+ acres isn’t closer than 10 miles away; this isn’t uncommon for the many unique properties that surround us. Either way, it’s a good reason to give your realtor a call, because the more unique a home is, the fewer comparable sales, and the more inaccurate the online valuation formulas tend to be.
For homeowners who want to stay as on top of their home’s precise valuation as possible, my recommendation is to ask your friendly Husky Homes realtor to set you up on an MLS search to track sales in your neighborhood. You can be notified when a new listing in your neighborhood hits the market, when it sells, and your realtor can help you interpret the differences between that home and yours to determine the estimated fair market value. Keep in mind that your home’s assessed value most often does NOT correlate with its fair market value. If you are tracking valuation based on how your assessed value and taxes are changing, this is not an accurate indicator, especially since every municipality handles this process differently.
