Luxurious new construction home in Bellevue, WA. Modern style home boasts two car garage framed by blue siding and natural stone wall trim. Northwest, USA

Determining how much your home is worth is a complex process that depends on a number of factors. (Getty Images)

You know how much you paid for your home, and you likely factor the work you’ve done and the memories you’ve made there into your idea of what it's worth. But while your home may be your castle, your personal feelings toward the property and even how much you paid for it a few years ago play no part in the value of your home today.

In short, a house’s value is based on the amount the property would likely sell for if it went on the market.

Why Should You Know the Value of Your Home?

You should have a grasp of the value of your home in a variety of situations: if you're getting ready to sell your house, looking to refinance your mortgage or buying a new homeowners insurance policy, for example.

For a better understanding of what your home’s value means, how it may change over time and what the impact may be if the market shifts significantly in your neighborhood, city or even the whole country, here’s our breakdown.

What Is the Value of My Home?

If your property value is based on what a buyer is willing to pay for it, all you have to do is find someone willing to pay as much as you think it’s worth, right?

Determining a home's value is a bit more complicated. Keep in mind that buyers place no value on the good times you've spent there and might not consider your updated bathroom or in-ground swimming pool to be worth the same amount you paid for the upgrades.

And even if you find a buyer willing to pay $350,000 for your home, the value of your house isn't necessarily $350,000. Ultimately, the financial backing in a deal determines the property’s value, and it’s most often a mortgage lender making the call.

Property valuation primarily takes into account recent sales of comparable properties in the area. Key identifying factors are the same square footage, number of bedrooms and lot size, among other details. Professionals who determine property values for a living compare all the details that make your house similar and different from those recent sales, and then calculate the value.

But when your property is unique – maybe it’s a triangular lot or a four-bedroom house in a neighborhood full of condos – determining the value can be more difficult.

[Read: Why You Should (and Shouldn't) Sell Your Home in 2020]


The individual, group or tool appraising the property may also influence the outcome of the appraisal since they all appraise properties differently for a variety of reasons. Here’s a look at common appraisal scenarios.

Lender Appraiser

In the case of a property sale, the appraisal often happens once the property has gone under contract. The lender will hire an appraiser to complete a report on the property, getting all the details on the house and its history, as well as the details of similar real estate deals that have closed in the last six months or so.

If the appraiser comes back with a valuation below that $350,000 sale price you’ve agreed upon, the lender will likely state that it is willing to lend an amount equal to the property’s value as determined by the appraisal, but not more. If the appraisal comes in at $340,000, the buyer has the option to come up with the $10,000 difference or try to negotiate the price down.

Many sellers are open to negotiation at this point, knowing that a low appraisal likely means the house won’t sell for a higher price once it’s back on the market, though excessive interest in a property may be able to sway an appraiser.

Lindsay Katz, a real estate agent with Redfin in the Los Angeles area, says low inventory and high demand has made the Los Angeles market extremely competitive following the initial lift of shelter-in-place orders during the pandemic. Multiple offers are expected, and homes often sell well above asking price. The sheer number of offers and consistently high offer prices make it easier to prove to an appraiser, at least so far, that the market value of the home has risen. “I don’t know how you can’t justify that price when 13 people agree,” Katz says.

Appraiser You’ve Hired

If you haven’t yet put your house on the market and are struggling to determine price, hiring an appraiser can help you get a realistic estimate.

Especially if you’re struggling to agree with your real estate agent on what the most likely sale price will be, bringing in a third party could provide additional context. The cost of a formal appraisal is typically between $300 and $400, according to Angie's List.


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Online Home Value Estimator

Many real estate information sites offer more informal home appraisal tools that will give you a ballpark value for your home. You may have previously taken a look at Zillow’s Zestimate or realtor.com’s My Home tool, or explored the Federal Housing Finance Agency's House Price Calculator.

It’s important to keep in mind that an online home value estimator is simply pulling from available information online and may not have all the facts that a professional appraiser would utilize in a valuation report. The online algorithms also don’t necessarily have the ability to account for more localized factors, like the impact of severe storm damage or trends taking place in your city.

“Market conditions can change pretty quickly, so for that you might find a slightly different price if you’re actually going to sell,” says Danielle Hale, chief economist for realtor.com.

Tax Assessor

Your home’s value also determines annual property taxes. In addition to examining the sale prices of similar houses that sold recently, a tax assessor looks at what the cost would be to build a similar house, whether you’ve done any recent improvements, if you earn income from the property and the cost of upkeep.

A property’s assessed value for tax purposes is often less than the appraised value – and that’s a good thing. The property taxes you pay annually are based on the assessed value, so the higher it is, the more you owe.

[Read: How Will a Recession Affect the Housing Market?]

How Do Market Values Apply to My Home?


There are multiple ways to find out the current value of your house, but individual appraisals and assessments aren't the only cases where you’ll hear about home values. In annual, quarterly or even monthly reports, home values are often discussed along with the rising cost of homeownership on a local, state and even national level.

Depending on the source of information, reported values may be based on online estimator tools, listing prices for houses currently on the market or property value information from local assessors’ offices. These numbers are useful to discuss trends on a large scale, but they don’t always reflect the actual sale prices of real estate deals that closed in those time periods.

The details you get about rising values can be useful as you prepare to put your home on the market, buy your first house or learn more about economic forecasts, but don’t take national trends as indicators of what’s happening in your area.

Hale stresses that housing markets differ from state to state, city to city and even among neighborhoods: “The closer you get geographically to matching up the area where your home is, the more likely the trend is going to reflect what happened to your home in that time.”

The importance of trends in home values depends on the stage of homeownership you’re in or moving toward. Here’s what you should know:

For Buyers

As you’re preparing to start house-hunting, keeping up on real estate market trends can be an excellent way to know what you’ll be facing. If values are climbing every month and year-over-year comparisons show high growth – for example, 5% or more – those are signs that a lot of buyers are looking for houses at the same time as you.

“That gives them an indication of how competitive a market is,” Hale says.

For Investors

Whether you’re looking to invest in a property for rental income or buy a fixer-upper for a quick turnaround, current market trends (on a regional or larger scale) may influence your choice of purchase. In LA and many other parts of the country, more time spent at home during the pandemic has caused many buyers to shift their focus when looking for a place to live. Instead of prioritizing proximity to shopping and nightlife, for example, “people renting or living in a condo are thinking they’d like to have a backyard, perhaps a pool,” Katz says.

But before you invest in a sprawling property with all the outdoor amenities, learn more about the market and its previous trends. You'll also want to crunch the numbers to see if rent will be able to cover the mortgage and upkeep on an income property.

For Homeowners and Sellers

If you're preparing your home for sale or just looking to learn more about your net worth, keep in mind that wider home value trends and reports have little impact on you.

“It’s probably going to be less directly relevant,” Hale says. “If you were to think about how your own individual property changed, a national trend is not a very good comparison.”

Instead, keep a close eye on hyperlocal reports; those that provide monthly or quarterly trends on your specific ZIP code can be a better reflection of what’s happening to your property value, Hale says.


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How Can I Increase My Home’s Value?


Whether you’re planning to sell now or in a couple of years, or you’re simply looking to make your home as valuable as possible in the long term, you can potentially help increase its value with regular maintenance, renovations or even additions that could appeal to homebuyers.

Short Term

Many homeowners are motivated to add value to a property when they're preparing to sell. It’s not impossible to add a couple thousand dollars to the price tag with some simple remodeling projects that can make your home look fresh and appeal to buyers. Here are a few:

  • Fresh paint in neutral colors.
  • New landscaping.
  • Smart thermostat.
  • New or refinished cabinets.
  • New or well-maintained roof.
  • New or well-maintained furnace or air conditioning.

Maximizing value isn't just about cosmetic fixes – it's also about focusing on key areas like the roof and HVAC systems that would come up in a home inspection. Issues like leftover water damage on the ceiling from an old roof leak or a cracked window will show up in the home inspector’s report. If anything concerns the buyer too much, you may run the risk of the deal falling through.

Midterm

If you’re looking to make changes to your home so it's on par with a different caliber of properties in your neighborhood, consider these larger construction projects:

  • Master suite addition.
  • Guest bedroom add-on.
  • Finished basement.
  • Garage construction.
  • Complete kitchen renovation.
  • Bathroom addition.

These more extensive changes can be an excellent way to take your home to the next level, but only if other houses like this exist in the area. Adding a master suite and new garage to a neighborhood full of two-bedroom bungalows with street parking won’t make the property appraise much higher than the others. That's because your house may no longer appeal to the typical buyer in that neighborhood.

[Read: The Guide to Home Renovations.]

Long Term

If you’re looking to increase your home’s value for the sake of your overall wealth, the best thing you can do is continue to pay off your mortgage and gain equity in the property. With proper upkeep and work to keep the home up to date, your home value will, on the whole, naturally increase over time.


Types of Roads That Can Have a Big Impact on Home Sales

The rule is "location, location, location" for a reason.

The urban view of  vehicle light trails on the road.

(Getty Images)

A homebuyer’s must-have list often includes a certain number of bedrooms, updated appliances and a garage or backyard. But one detail that’s sometimes overlooked is just outside the property lines – and it’s a major deal-breaker for many. The road your house is located on, backs up to or is even in the general vicinity of can have a significant impact on your quality of life as well as your home’s resale value and how long it takes for you to find a buyer. Before you buy your dream home on a busy street or near a railroad, consider how these roads and locations can become a major turnoff for future buyers.

Updated on Nov. 1, 2019: This story was published at an earlier date and has been updated with new information.

High-traffic road

High-traffic road

The urban view of  vehicle light trails on the road.

(Getty Images)

Living off of a road that sees a lot of traffic throughout the day can make for a hassle getting in and out of the driveway. And when you decide to sell, potential buyers will worry about its resale value, says Greg Hague, CEO of Hague Partners and 72Sold.com, real estate brokerages based in Scottsdale, Arizona. “The biggest detractor in home values (on a busy road) is the fear that buyers have that these homes will be harder to sell,” he says. It might take more time on the market and a lower asking price to entice buyers over a similar home on a quieter street.

Cul-de-sac

Cul-de-sac

Aerial view looking directly down on a cul-de-sac in a planned exclusive residential community in the Scottsdale area of Arizona.

(Getty Images)

A cul-de-sac is a dead-end road with only one entrance and exit to other streets, and on residential streets it often includes a circle for cars to turn around. Often located deep within a subdivision or at the end of a neighborhood, a cul-de-sac means minimal traffic, which will be a big selling point down the line. The farther inside the neighborhood you go, the less traffic you’ll experience and the more desirable the houses typically become, explains Roberta Parker, a real estate agent for Berkshire Hathaway HomeServices Fox & Roach, Realtors in Princeton, New Jersey. A cul-de-sac may also back up to a wooded area or undeveloped land, so homeowners benefit from the added privacy of having no neighbors behind them. As Parker says: “A cul-de-sac is your best investment.”

Dirt road

Dirt road

One of the streets of the village of Tsevlo in the Pskov region

(Getty Images)

Some people prefer to get away from heavy traffic so much that they’ll leave pavement altogether. A dirt or gravel road will certainly attract fewer cars, and properties on a dirt road are often larger with more land. While a buyer should expect his house and car to be dirtier because of the dust or mud of the road, many homeowners consider it a fair trade-off. “We don’t really find that that is a detractor in value – it’s a lifestyle,” Hague says. While you may not have the same size buyer pool for your house as a home in a developed subdivision, you shouldn’t have to worry about would-be buyers seeing your dirt road as a negative in terms of home value.

Near a traffic light

Near a traffic light

Traffic light on red, Manhattan, New York, America, USA

(Getty Images)

Even if your area doesn’t experience high traffic volume throughout the day, having a traffic light within eyesight of your home can be irritating. Timothy Somers, a real estate appraiser and partner at the appraisal firm Davis M. Somers Co. in Ann Arbor, Michigan, lives near a traffic light. For him, it’s the noise from idling cars at the red light that can be a bit bothersome, although he’s gotten used to it over the years. “It can get noisy at times – not so much the traffic, but the loud music and that sort of stuff is annoying,” he says. Potential buyers may feel that way too.

Alley

Alley

Stunning sunset of famous posh residential area in Jiyugaoka, Tokyo, Japan.

(Getty Images)

An alley is a narrow street between buildings, often in a city setting, that may not even be marked on a map. But in older cities and historic districts, you may occasionally find property addresses that take you to a door in the alley rather than on a main street. It may be hard for visitors or potential buyers to find, but Hague explains an alley entrance is considered a plus for home value: “You obviously have no traffic – just foot traffic. It’s unique, and people like unique.” The feeling of privacy and exclusivity can play up the desirability of the home and make a buyer willing to pay more for it.

Double yellow line

Double yellow line

Asphalt road with yellow double line

(Getty Images)

The area might not seem busy if you visit on the weekend, but if the home is located on a two-lane road with a double yellow line to prevent cars from passing each other – most often found in less-populated suburban or rural areas – Parker says it’s a red flag that a lot of cars use the road. “A double yellow line is an indication that there is more traffic, and it’s not typical of just a neighborhood. A double yellow line is a serious road,” she says. Expect it to be difficult to turn left out of your driveway during peak traffic hours. Also expect speeds higher than 25 miles per hour, which may make spending time in the front yard feel unsafe if you have pets or young kids.

Highway within sight

Highway within sight

Multiple Lane Highway

Pete Farrington/EyeEm/Getty

Regardless of how far you travel to work, a home next to an on-ramp is not ideal due to the noise pollution and the difficulty you’ll have trying to sell it in the future. It's better to live in a neighborhood that is set up to provide easy access to commuting options and where you won't have to see or hear traffic from a highway.

Railroad

Railroad

train passes a crailway crossing by night at route 66

(Getty Images)

With a railroad near your home, you have a whole new type of car to be concerned about. Trains are loud to begin with, and if you live near a tunnel, train station or railroad crossing, expect even more noise as conductors sound horns and bells to ensure the track is clear. “Some people would shy away from a location like that. … When a freight train rolls through, it clanks, and there’s horns and more noise,” Somers says. If you’re considering buying a house near a railroad track, find out how often it’s used and the times of day trains will pass by. A regular midnight freight train could keep you up at night in your new home.

Brick or cobblestone paving

Brick or cobblestone paving

Stone street

(Getty Images)

A brick or cobblestone street often comes with the assumption that the houses on that street are as old as the paving. You may even live in a historic district of your city or town. “They’ve kept that (paving) because it has a such a historic and a kind of cool feel,” Hague says. A well-maintained house on a historic street will attract many potential buyers willing to pay top dollar for the location and overall look. Living in a historic district also means you’re expected to maintain your home to historic standards, so you’ll likely need to seek approval to paint your house, renovate the kitchen and even update the plumbing. All of these projects are likely to be more expensive for historic houses, as you may need to hire contractors with experience working on historic properties.

Corner lot

Corner lot

Typical family house neighbourhood in downtown Toronto. Fall season, no leafs on the trees, sunny day.

(Getty Images)

Attitudes about corner lots within a neighborhood can vary depending on an individual’s preference, but Somers says preferences have evolved to favor interior lots. “Corner lots back in the ‘50s and ‘60s were a premium site. Today people will steer clear of them; they don’t like them as well,” Somers says. “Because of the yard configurations, they usually end up with a small backyard and large side yard. It’s less appealing than the standard interior lot. Plus, they’ve got twice the sidewalk to shovel.”

One-way street

One-way street

Photo Taken In United States, Sapulpa

(Getty Images)

One-way streets are often found in more urban settings and often close to downtown to reduce gridlock. While it might prove inconvenient at times to live on a one-way street when you’re running late and need to head in the opposite direction, people don’t seem to let it affect their preference. Somers says he doesn’t see any change in desirability for a property located on a one-way street. So don’t be concerned about attracting potential buyers – the appeal of living close to downtown will likely outshine any downsides of living on a one-way street.

Types of roads that could affect your home value:

Types of roads that could affect your home value:

This is a picture of a cul de sac

(Getty Images)

  • High-traffic road.
  • Cul-de-sac.
  • Dirt road.
  • Near a traffic light.
  • Alley.
  • Double yellow line.
  • Highway within sight.
  • Railroad.
  • Brick or cobblestone paving.
  • Corner lot.
  • One-way street.

Read More

Updated on Sept. 15, 2020: This story was published at an earlier date and has been updated with new information.

Tags: real estate, housing, housing market, home prices, new home sales, existing home sales, pending home sales, home improvements


Devon Thorsby is the Real Estate editor at U.S. News & World Report, where she writes consumer-focused articles about the homebuying and selling process, home improvement, tenant rights and the state of the housing market.

She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.

Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at dthorsby@usnews.com.

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