When it comes to understanding your home's worth, the "home value estimator" is where it all begins. Whether you're a homeowner curious about your property's value or someone looking to sell, estimating a home's value can help set realistic expectations and strategic goals. But obviously this isn't just about numbers... it's about understanding what truly adds value to your space and why.
In this ultimate guide, we'll break down every factor that affects home value, from luxury home renovations to market trends. Plus, you'll find links to deep-dive articles on appraisals, renovations, and real estate comps, making this the only guide you'll need for a complete picture.
Does knowing your home value matter that much?
Actually, yes! Understanding your home's value is more than just knowing a number. Your property's worth affects your equity, refinancing options, and, of course, the price you can set if you're thinking of selling.
Knowing the value of your home can influence a number of financial decisions:
Selling price: The most obvious reason is to set a realistic selling price. If you set your price too high, you risk scaring off potential buyers. Too low, well...it's too low. Knowing the right range can make a world of difference when attracting offers and negotiating terms.
Refinancing options: If you plan to refinance, lenders will look at the home's value. A higher home value means more favorable options. Lenders look at this value to determine whether they'll approve your application and what interest rate you'll get. The higher your home's value, the more favorable your refinancing terms could be.
Equity calculations: Home equity (or the portion of your property that you own outright) depends on your home's current market value. Knowing this helps you understand how much money is tied up in your property. If you owe $200,000 on a home that is worth $300,000, your equity is $100,000. As your home increases in value, so does your equity. Having a GOOD understanding of this number can help you plan for future investments, like using it for major life events or even for taking out a loan.
Homeowners insurance: Insurers base premiums on property values, so an updated home value ensures you're adequately covered.
Obviously, the real estate prices are always changing. A house worth $500,000 today might be worth $700,000 in a few years. Several factors contribute to these fluctuations.
See also: Home market value vs appraised value: This thing really impacts your property.
How often do home values change?
Home values can change frequently, but the rate of change depends on so many factors. While some changes happen over a long period of time, others can be more immediate, influenced by shifts in the local real estate market, national economic conditions, and even specific improvements made to the property.
Here's a breakdown of how often the home value might change and the factors that cause those changes:
Short-term fluctuations (monthly and/or quarterly)
Home values can experience short-term fluctuations, especially in a dynamic market.
These changes are typically driven by factors such as:
Seasonal changes
Local real estate markets often see seasonal changes in supply and demand. For instance, the real estate market may be more active in the spring and summer, leading to higher home prices due to increased demand. Which is not the case during winter or fall months.
Interest rates
Everyone knows this. Mortgage interest rates fluctuate... regularly. When rates rise, fewer people may be able to afford homes... potentially reducing demand and lowering home values. Obviously, if rates drop, the opposite can occur: more buyers may enter the market, which can drive prices up.
See also: Why home value estimators matter in a fluctuating market.
Local economic events
Changes in the local economy, such as the opening or closing of a major employer, can have a noticeable short-term impact on home values. For example, if a tech company moves into a region and creates new jobs, the demand for housing may rise, increasing property values in the area.
Medium-term changes (annually)
Home values tend to stabilize over the course of a year. There are a few things that influence medium-term changes:
Annual property tax assessments
Property values are often reassessed by local governments annually for tax purposes. While these assessments may not (always) be entirely accurate or reflective of current market conditions, they do provide a general idea of whether home values in a certain area are increasing or decreasing. For example, in Connecticut, the assessment of your property is based on 70% of what your home is worth in a revaluation year.
This is why it's important to stay on top of your home's value during a revaluation year. If you know your home is worth more than the town's estimate, you can challenge the assessment or prepare for the tax implications. If it's lower than expected, you might be paying less in taxes.
Either way, knowing your home's fair market value can give you a clearer picture of your taxes...and how to handle them.
Real estate market trends
Broader real estate market trends (think: rising or falling property values in a region) may become clearer after a full year. For e.g., if a region is undergoing economic growth, home values may rise steadily over several months or years, which will become more apparent at the annual mark.
Inflation and economic rowth:
National economic factors like inflation, GDP growth, and employment rates can have an indirect impact on home values over the course of a year. If the economy is growing, home values tend to increase as more people can afford to buy homes.
See also: Housing market predictions 2025: How it impacts your property's value.
Long-term changes (Over several years)
These long-term trends can be much more significant, such as:
Cyclical patterns
Home values generally follow a cyclical pattern. Over time, a home value may rise steadily due to economic expansion, and then dip slightly during periods of recession. Over a decade or more, real estate typically appreciates in value, though the rate of appreciation can vary depending on the area.
Urban development
In cities and urban areas, new developments, infrastructure improvements, or gentrification can lead to significant long-term increases in home values. As households compete for scarce locations, those who are more willing to pay (more) coupled with their desire to live in a given location - bid up house prices. Conversely, areas that experience economic decline or lack investment may see long-term decreases in home values.
Aging of homes:
As homes get older, they may either increase in value due to renovations and improvements or decrease in value if maintenance is neglected. A well-maintained home can continue to appreciate for years and years, while a property in "neglect" may lose value over time, especially if it requires major structural repairs.
See also: At what age does a house start losing value?
Factors that can cause IMMEDIATE value changes
There are some cases when home values can experience more immediate changes. These are often due to some (extraordinary) circumstances, such as:
Natural disasters: Events like floods, hurricanes, or wildfires can instantly decrease the value of homes in the affected areas, sometimes causing a dramatic drop in market value. Or....some areas may experience a boost in value following a rebuilding effort or improved infrastructure.
Cheap or luxury home renovations: Major upgrades or renovations can cause an immediate increase in the value of a home, especially if the renovations are high-end. For example, adding a luxury kitchen or bathroom or making significant changes to the home's exterior can increase market appeal and home value almost overnight. Also, you don't have to do only luxury renovations to increase its value... there are cheaper options as well that bring in a huge ROI.
Market shocks: Sudden events like a financial crisis, a significant change in local employment rates, or unexpected policy shifts (like changes in tax laws) can have an almost immediate impact on home values.
So, how often do you need to check your home's value?
For buyers and sellers: If you're actively buying or selling, you'll want to keep an eye on home values more frequently—usually every few months to every quarter. This will help you for 2 reasons:
You stay aware of market changes
You can adjust your expectations accordingly.
See also: The role of property valuation services in selling and buying.
For homeowners tracking investment: If you're just monitoring your home value for personal or financial reasons, checking once or twice a year is usually enough. It allows you to track how the value of your home is evolving in response to broader market trends and local conditions.
Yes, but, how to find the value of your home?
Step 1: Start with a home value estimate
The first and easiest step to get an (accurate) idea of your home's value is by using a free (or paid) home value estimator. These tools pull data from multiple sources to give you a quick snapshot of what your home is worth, based on various factors such as location, property size, and recent sales in your area.
For example, at locqube, our home value estimate tool is fast, free, and super simple. You can get an estimate with just a few clicks, and the best part? It's based on real-time market data of homes/properties similar to yours, so you're getting a pretty accurate idea of YOUR home's current value. Think of it like a starting point—it gives you the ballpark figure, but the process doesn't end there.
Let's say you live in a neighborhood with homes similar to yours that have recently sold for around $450,000. By entering your home details into a tool like locqube's, the estimate might tell you your home could be worth around $440,000 to $460,000, depending on specific features like upgrades, square footage, and the condition of your home.
Step 2: Research comparable sales in your area
Once you have an estimate, the next step is to research comparable sales, AKA "comps," in your neighborhood. Comps are recently sold homes that are similar to yours in size, location, and condition.
See also: What do good real estate comps look like?
By looking at these homes, you can get a better understanding of how your home compares and whether the estimate you received aligns with real market trends.
Example:
Imagine you find that three similar (very important) homes in your area recently sold for around $440,000 to $455,000. After checking the features—such as the number of bedrooms, bathrooms, and whether they have a pool or updated kitchen—you notice that your home is in similar condition and size. This reaffirms the value estimate you received earlier.
Step 3: Consider the condition of your home
The value of your home doesn't just depend on its size or location—it's also about its condition. Homes that are well-maintained or recently renovated tend to be worth more than those in need of repair. When estimating your home's value, take a close look at the current condition of your property.
Ask yourself:
Has the roof been replaced recently?
Are the plumbing and electrical systems up to date?
Is the home clean and well-kept, or does it need repairs?
Are there any upgrades, like a renovated kitchen or new flooring?
If your home is in excellent condition and has recent upgrades, it might be worth more than the estimate you received from the home value tool. And...if it needs repairs or improvements, you might want to adjust the value downward to account for these costs.
Step 4: Use a professional appraisal (Optional)
If you want a more precise valuation, you can hire a professional appraiser to assess your home's value. An appraiser is a licensed expert who will visit your home, evaluate its condition, and take into account market trends, comparable sales, and other relevant factors.
While this is the most accurate method for determining home value, it comes with a cost. Appraisals typically range around $500, and you might want to get one if you're seriously considering selling or refinancing and want to make sure you're getting the best price.
However, many homeowners find that an online estimate combined with research on comparable sales is sufficient for most needs, especially when paired with tools like locqube.
Step 5: Factor in additional features
While location, size, and condition are the primary factors in determining your home's value, don't forget about additional features that could add value. Things like a finished basement, a backyard pool, or energy-efficient appliances might make your home more attractive to buyers and increase its value.
If your home has unique - or let's say - desirable features, factor them into your home value estimate. locqube's platform allows you to highlight these features when you enter your home details, making sure you get the most accurate estimate possible.
Example:
Let's say you've recently added a new deck and landscaping to your backyard. These upgrades might add value to your home, potentially pushing the value up by $10,000 or more. Make sure to consider these features when using home value tools or when working with an agent to list your home.
Step 6: List your home and manage the sale with 1.99% commissions
So, you've figured out what your home is worth, and now it's time to sell.
But the process of listing and managing a sale can often feel overwhelming, right?
With agents taking a large cut, endless paperwork, and the usual back-and-forth, selling your home can get stressful.
Here's where locqube comes in to change (literally) everything.
There's the old-school way of listing your home, where you have to deal with sky-high commissions, endless paperwork, and letting someone else take charge of everything.
And then, there's locqube that puts YOU in the driver's seat.
You can easily list your home, connect with potential buyers, and manage the entire process right from your phone or computer.
Need an accurate estimate? Done.
Need to schedule a showing or respond to offers? Done and done.
Need help from a professional and experienced agent? Done
No more waiting around for updates or wondering what's next.
The best part? You get to decide how involved you want to be. Need expert advice? We're here when you need us. But if you want to take the reins, go ahead.
It's something that's never been done before!
locqube is built for sellers in the name of more control, clarity, and a simpler, faster process.
We've created a platform that lets you handle much of the process yourself, but still have expert support whenever you need it.
And here's where it gets even better: with locqube, the commission is only 1.99%, much lower than traditional agent fees, which often range from 5-6%.
"Why? Is this a trick? How is this possible?" - you're probably thinking all this…
Well, because locqube is built to streamline the process, cutting out unnecessary steps and focusing only on what you need.
You take the charge → more efficient → reduced costs → low commission → you keep more money from your sale.
Less overhead means lower costs, and we pass those savings on to you. That's why our commissions are at 1.99%!
You DON'T need to deal with high commissions, complex contracts, or agents controlling the ENTIRE process. We're revolutionizing the whole process, where everything is streamlined in 1 platform.
Just an efficient, smarter way to sell your home.
Let's MOVE AMERICA to a better way of selling. More savings. More control. A smarter, simpler future for real estate.
