What is my home worth? How valuation really works

Ask five sources what your home is worth and you may get five answers. Each uses different information for a different purpose, so knowing the difference helps you pick the right one.

The short version: an agent's market analysis and an appraisal are the most reliable. Online estimates and tax assessments are starting points, not prices.

The main ways to value a home

• Comparative market analysis (CMA): from a real estate agent. It looks at recent sales of similar homes nearby and adjusts for differences. It is usually free and is the standard way to price a listing.
• Appraisal: a formal valuation by a licensed appraiser, usually required by a lender. It carries a fee.
• Municipal tax assessment: used to calculate property tax and not a market price. It is set as of a past valuation date and often differs from what homes sell for.
• Online estimates and automated valuation tools: use public data and statistics, and they can easily miss by 10% or more because they cannot see condition, updates or layout.

What affects value most

Location, size, age, condition, updates and the sales of comparable homes in the last few months. Lot size, layout, parking, the street and the school area also matter. Asking prices are not sale prices, so look at sold prices.

How comparables work

A good comparison uses homes that are similar in type, size and location, and sold recently, ideally within the last three months and a short distance away. The agent then adjusts for differences, such as a renovated kitchen or a smaller lot.

Example

Three comparable homes nearby sold for $780,000, $800,000 and $820,000. Yours has a newer kitchen but a smaller lot, so a fair range may be $790,000 to $810,000, and a good agent will explain each adjustment.

When you need which

• Curious about equity: an online estimate and the sold prices nearby.
• Selling: two or three agents' CMAs.
• Refinancing or a HELOC: the lender will order an appraisal.
• Disputing your property tax: compare your assessment with sold prices.

Value versus price

Value is an opinion. Price is what a buyer pays. In a hot market, bidding can push the price above the estimate, and in a slow one, below it.

How to use the numbers

Use several sources and treat them as a range, not a promise. Our Property Calculator gives a quick reference estimate, but it is not an appraisal. Before you list, get an agent's CMA or an appraisal.