How Much Is Your Home Worth? (And Why Property Valuation Matters)
Mar 21, 2024
2 min read
When you buy a home, the price is a big factor in your decision. But if you鈥檝e lived in your home for a while and you don鈥檛 have any plans to sell, you might not know the property value of your home.
However, it鈥檚 important to know the value of your home, and not just because the equity you have in it is part of your net worth. Knowing your home鈥檚 value and understanding the importance of the property valuation are key aspects of your financial situation for two other reasons: insurance and taxes.
Read on to learn how to find your home鈥檚 value and what happens if your house value goes up or down.
How Much Is My Home Worth?
Are you asking yourself, 鈥淲hat is the property value of my home?鈥� There are several strategies you can use to come up with a number.
The easiest way to determine your home鈥檚 value is to use online tools offered through banks and other financial institutions or real estate websites like or . These tools use public property records to estimate your home鈥檚 worth. These methods are fast, easy and free 鈥� you鈥檒l get a helpful number within seconds. However, they may not be entirely accurate.
Real estate agents can also determine the value of your home based on a comparative market analysis. That鈥檚 when they compare your home to nearby homes that are for sale or have recently sold. They can consider nuances in your local market that might not appear in online tools. For example, they may know that a nearby house sold for a low price because the sellers had to move right away, and the price doesn鈥檛 accurately reflect the market. Many agents offer to provide comps and an estimate of your home鈥檚 value at no cost.
A professional home appraisal is your best bet for finding the most accurate property valuation. In this process, an appraiser comes to your home and physically documents your house inside and out, then factors in aspects like your floor plan, square footage, repairs needed, surrounding neighborhood and similar home sales. They combine all of this information to estimate your home鈥檚 value. Home appraisals can cost from $250 to $1,200, depending on the size and value of your house and your location.
An Undervalued Home Means You Could Be Underinsured
Your homeowner's insurance is determined by your home鈥檚 appraised value. So, if your home is worth a lot more than it was when you insured it, and you haven鈥檛 updated your policy, you might not have the coverage you need if disaster strikes. Your coverage amount determines your 鈥渁ctual cash value鈥� 鈥� or the 鈥渞eplacement cost鈥� 鈥� of your home. That鈥檚 one reason it鈥檚 important to stay updated on your home鈥檚 value.
Home prices have been rising in many parts of the country. Over five years from 2018 to 2023, homeowners in Reading, Penn. saw their homes increase in value by 89%, according to . Those in Birmingham, Ala., saw an average increase of 91%, and homeowners in Detroit saw values increase almost 184%.
Similarly, if you鈥檝e made improvements that could impact your home value, let your insurance agent know. An annual insurance coverage review with your agent is a great way to stay current on the value of your home.
An Overvalued Home Could Mean Higher Taxes
Taxes on your home and property are based on your home鈥檚 assessed value, which is determined by your city, county or state. The assessed value is often different from your appraised value. The assessed value reflects how your property will be taxed, not necessarily what it鈥檚 worth on the market.
You鈥檒l receive your assessed home value annually, but you can also access it on your local city, county or state assessor鈥檚 website. It鈥檚 important to keep track of this number to avoid being overtaxed, as your home鈥檚 value changes with the real estate market. In most areas, if you feel your property assessment is too high, you can contact the government agency in charge of assessments to see if you can have it re-evaluated.
Protect Your Home Today
Your home is one of your most valuable assets, and knowing what it鈥檚 worth can help ensure you protect it properly. By knowing your property value, you can feel confident you have the protection you need if the unexpected happens.
If you鈥檙e not sure whether your home is valued properly and you want to be certain you have the coverage you need, reach out to a Farm Bureau agent.