Three tools to estimate the value of your home

Ever wondered, "What is the value of my house?" or "How to find the value of my house?" Whether you’re actively looking to sell or just curious to know what your home is worth, fluctuations in the housing market over the last few years have surely affected its closing price. You can always guess the value of your house, but if you need to get a firm grip on home value – either because you are considering selling or because you need to update your property’s insurance policy – here are three great home price estimation tools:

1. Multiple listing services

Local real estate groups manage databases of home sale prices and other details. These databases are known as multiple listing services (MLS). The list of comparable sales an agent shows you in her “free market estimate” comes from the MLS. All those house listings you see on Zillow, Trulia and Realtor.com? They’re all pulled from MLS data.

You can access MLS information about completed sales without asking an agent to spend time and effort preparing an estimate for you. 

Advantages: As a seller, you benefit greatly when a realtor lists your home on the MLS. First, you’ll increase your home listing’s general visibility because multiple listing services typically share portions of data with third-party, public sites. Also, since MLS is only available to licensed agencies, the inquiries and offers made through the platform will come from highly qualified buyers. 

This is a huge time and energy saver both in terms of fielding phone calls and when it comes to showings. Showing your home is a stressful endeavor; you must get everything clean and organized, then dash out of there while prospective buyers take their time analyzing every detail of your home.

An MLS-vetted pool of initial prospects can mean fewer showings for you and more serious offers from buyers ready to make an offer.¹

Disadvantages: There really aren’t many cons to listing your home on an MLS. MLS is so efficient because it provides so many with accurate market information which really levels the playing field. One drawback may be that large firms benefit from access to private information.

Another, albeit minor, negative for some might be the cost to post to the MLS since it requires paying an agent to put your home in the database.¹

2. Federal Housing Finance Agency (FHFA)

Another great source of house price trend data is available monthly through the Federal Housing Finance Agency. The data offered is based on mortgages refinanced through Fannie Mae and Freddie Mac, which buy mortgages from lenders to keep cash flowing through the home lending system.

For instance, the Federal Housing Finance Agency Price Index reported that house prices rose 17.7% nationally from the second quarter of 2021 to the second quarter of 2022.²

You can use the House Price Calculator to apply the trend data to your house.

Advantages: FHFA data shows where markets are heating up and cooling down, giving you additional context for a real estate estimate.

Disadvantages: The data illustrates the theoretical home value and can be a starting point to see how local trends might shape the value of your house. But it’s an informed guess. The data tends to lag behind the market and won’t reflect fast-moving local conditions.

3. Automated Valuation Model

With all of this data available, some companies create automated value models (AVM). When you use these, look for an explanation of the methodology it deploys. You want to see that the calculator allows you to add variables, such as improvements you have made to your house.

One of the top AVMs out there is ATTOM AVM. This AVM is powered by ATTOM’s nationwide property and sales database, and offers property valuations on over 84 million American homes, covering 98% of the U.S.

ATTOM has several ways to estimate AVM, including market metrics derived from clusters of comparable in-market properties, statistical models, and value blending approaches. ATTOM’s median absolute error is 6% when comparing its property estimates to sale prices.²

It’s one thing if a house increases in value along with all the other houses on the block. It’s another if the house increases in value because its owners added a family room. “Hedonic” models include changes like that.

• Consumers really like them as it’s a great way to give homeowners a sense of their property value without having to deep-dive into the real estate process. It makes for interesting information and a safe place to start the home sale process.
• The AVM is a proven way to attract more valuable seller leads which are coveted by real estate agents and can be harder to capture digitally.
• A good AVM might be a positive sign for someone thinking about selling their home and could encourage them to reach out to an agent to see what the next steps might be.

• AVMs are only estimates and should not be used in place of more in-depth property valuations such as home inspections or Comparative Market Analysis (CMA) tools. It’s a starting point to encourage online visitors to call an agent and not a replacement.
• The average estimate is off by (+/-) $14,000 and some areas of the country are more accurate than others depending on the availability of public records in that area.
• AVMs are automated and therefore don’t consider things like intangible changes to the neighborhood or home improvements not reflected in public records.³

The most reliable source of market value is always a home appraisal. An appraiser is a professional who comes to your house to look it over, reviews detailed records of home value for your area, and then hand-calculates estimated value. It should also be noted that mortgage lenders only accept appraisals as part of the mortgage approval process. Typically, a single-family home appraisal will range from $300 to $450, but that number can vary based on factors like home size, the value and condition of the property, and the level of detail in the appraisal. A larger home will likely be more expensive to have appraised and appraisals in larger cities or areas with higher living costs tend to range from $500 to $800 or more.⁴