Even if you aren't looking to sell your home in the near future, it's still important to have a good idea where the housing market sits. Think of it like the stock market. Many people who are invested in the stock market check their stocks every single day. Even though it's difficult to constantly stay up to date on the housing market like it is with the stock market, it's still important to know.
How Much Is Your House Worth?
When determining what your home is worth, it's important to look at it from a sales comparison approach. This involves finding similar homes to yours in your area and comparing the sold price of these homes using 'above ground square footage'. When comparing homes sold price and above ground square footage, we come up with an average price per above ground square foot for the homes we compared. This price per above ground square foot is very important because it's the key component when appraisers put a value on a home.
A home with above ground square footage of 1,000 sq/ft is sold for $100,000. This homes price per above ground square footage would be $100/square feet. Lets take this a step further. If your house has 1,500 above ground square feet, then according to our price/square foot formula your home could potentially sell for $150,000 (without taking into consideration any updates to your home.
The Ultimate Guide To Pricing Your Home
Step 1: Finding Comparable Homes To Yours
The first step to accurately putting an accurate value on a home is to find homes that are similar to the home we are trying to price.
Aspects that we compare include but are not limited to:
- Price per square feet
- Price per above ground square feet
- Neighborhood/surrounding homes
- School District
- Year Built
- Finished Basement
Step 2: Compile Into List
For step 2, we take the homes we found in step 1 and compile them into a list. We also put these comparable homes onto a map showing their exact location compared to the home we are doing an analysis on.
Step 3: Convert The List of Comparable Homes Into an Easy to Read Graph
Once our list is compiled, we then place these for sale and sold comparable homes on a linear regression graph. On this graph, points are plotted based on each home's price per above ground square footage. After the points are plotted we then draw a line based on the average price per square foot of the comparable homes being sold. Finally, we draw and color in a circle on the graph that represents the range in which we believe your home could sell for in today's market conditions.
Remember: In order for our team to put a more precise value on your home, other aspects must be considered such as:
- Overall home layout
- Utility ages including roof and windows
- Amenities to your kitchen
- Bathroom amount and quality
- Flooring type throughout the home
The blue line on the graph typically represents homes with average amenities.
As mentioned before, the sold price per square foot is the key component to an appraisers valuation. The value of a finished basement is added in to an appraisal at a much lower price per square foot. A rough estimate and general rule of thumb is that finished basement square footage is 25-30% of the above ground price per square foot value.
If you have just read this post or watched the video and would like to find out an approximate value to your home we highly recommend using our home valuation tool below. Although not perfect, this tool will give you a close estimation and range of what your home could potentially sell for.
Once you use our tool, we will complete a much more in depth analysis of your home using our ultimate guide to pricing your home as described above.