How Much is My House Worth?

We all want to know how much our home is worth. There is a reason why home value websites, such as Zillow, are so popular. However, having already addressed in my last blog post how inaccurate Zillow is, it’s worth discussing the flip-side of things – how much is your house actually worth?

First, let’s think about the term “value” on a general level. Something’s value – what it’s worth – is only as much as someone is willing to pay for it. You might think your car is worth $15,000, but if you can’t find anyone to buy it for more than $10,000, then the real value is $10,000. It is no different with houses.

Here is a general rule of thumb – the only sure way to accurately appraise how much your house will sell for is to use this formula: the general value of homes in your neighborhood minus the cost of repairing/renovating your house minus 20-30% equity. Let’s break down the pieces of this formula.

Most people understand that their home value correlates in some way to the value of the other homes in their neighborhood. But how do you determine what those homes are worth? This is actually very simple – you just look at what the similar homes that are nearby to your home have sold for in recent months. For instance, if there have been four homes in your neighborhood that recently sold in the range of $70,000-80,000, then your home, after any necessary repairs have been done, is worth about that much.

However, that doesn’t mean that you can just sell your home for that price. You still need to factor in the repairs that need to be done on your home. Let’s say that homes in your neighborhood sell for $70,000-80,000, but your home needs $10,000 in repairs done. Here is the reality: no one is going to buy your house for $70,000-80,000 because after the repairs, they have paid more than what the home is worth!

Now, it’s worth mentioning that most people would not be willing to purchase your home with $10,000 worth of repairs to be done on it. Most homebuyers want you to do the repairs for them, and then they purchase the home after you do those repairs. But when it comes to the numbers, the end result is the same: if you do the repairs yourself, you may sell the home for $10,000 more but you will be out $10,000 from when you did the repairs. You lose out on the repair money either way.

There is one more consideration: equity. The days are long gone that someone is willing to buy a home for simply what it’s worth. Everyone these days understands that home values can plummet overnight, and they want to play it safe by getting a home with equity – in other words, purchasing the home for slightly less than what it’s worth. The general rule of thumb is if you want to sell your house fast, you should plan on giving your buyer 20-30% equity in the home. If you aren’t willing to give your buyer equity, there is a possibility that you may still be able to sell your home, but you can plan on having it sit on the market for a very long time (something I discussed in point #2 of this blog post), which I assume, since you are on this site, you want to avoid.

So let’s give an example. Let’s say your house is in a neighborhood that typically sells homes for $70,000-80,000. That means your home is worth about $75,000. But you also have about $10,000 of repairs that need to be done and about 25% equity ($18,750) that needs to be factored in. The real value of your home is approximately $75,000 – $10,000 – $18,750 = $46,250.

You might be thinking: “$46,250! That’s all I can sell my home for!??” In this case, yes – but if you were to sell your home to Upstate House Buyers, that number isn’t as bad as it may seem. With Upstate House Buyers, you don’t pay any closing costs, realtor fees, attorney fees, commissions, etc. – fees which can run into the tens of thousands of dollars – and you don’t even need to repair or clean your house. We will buy it as-is and take care of all the other expenses for you. (You can see a breakdown of how much money you could save by selling to Upstate House Buyers in point #5 of this blog post.)

The good news is that you can get a free evaluation and estimate of what Upstate House Buyers will purchase your home for by simply clicking here and filling out our survey. The worst thing that can happen is that you decide not to sell us your house – no harm is done to you or to us! So give us a shot, and let us know how we can help you.

How accurate is Zillow?

In real estate, the million (actually, more like billion) dollar question is this: how much is my house worth? Sites have popped up all over the internet claiming to estimate home values. Type in your address and – voila! – you have a neat and tidy figure for how much you should be able to sell your home for.

There’s only one problem, however. Those websites almost always are way off in estimating home values. Why? Because they don’t have any way of assessing what number of repairs need to be done on a home or, on the flip side, how many upgrades have been done. So one home that is literally falling apart may be next to another home that recently had $20,000 in upgrades done to it, and Zillow will list them as being worth just about the same amount, since the website’s algorithms don’t take those factors into account.

To illustrate the inaccuracy of these websites, I refinanced my mortgage last year and had to have an appraisal done on the property. An appraiser came out and walked around the outside and inside of my house taking detailed notes, and then did an extensive amount of research on the surrounding neighborhood that I live in to determine my exact home value. In other words, her appraisal was very detailed, and it needed to be, because that’s what the banks who provide the mortgages demand. So how close do you think her appraisal (taken just a year ago) compares to what Zillow currently says my home is worth? Zillow claims that my home is worth a whopping $38,000 more than what the appraiser concluded!

Now my home has probably gone up in a value a little bit over the past year, but I haven’t done $38,000 in renovations. The fact that Zillow would be that far off from what an actual appraiser concluded a home was worth is shocking to some degree, but again, those websites aren’t factoring in the inside of the home, which is the most important part! So we should expect them to be inaccurate.

Very few people are able to sell their home for the price that Zillow says they should. In fact, Zillow benefits from over-inflating home values because that will bring more people to the website to feel good about their home. It is a sad but very real reality, and if you really want to know what your house is worth, you should talk to someone who wants to buy it. Ultimately, your property is only worth what someone is willing to pay for it.

The good news is that finding a buyer is easy! Upstate House Buyers will evaluate your house for you and tell you what we would be willing to pay for it. Ultimately, your house is only worth what someone is willing to buy it for, and we would be glad to tell you what we will buy it for if you will only fill out a short survey on your house here.