How Much Is Your Home Worth? (And Why Property Valuation Matters)

When you buy a home, the price is a big factor in your decision. But if you’ve lived in your home for a while and you don’t have any plans to sell, you might not know the property value of your home. 

However, it’s important to know the value of your home, and not just because the equity you have in it is part of your net worth. Knowing your home’s value and understanding the importance of the property valuation are key aspects of your financial situation for two other reasons: insurance and taxes.

Read on to learn how to find your home’s value and what happens if your house value goes up or down.

How Much Is My Home Worth?

Are you asking yourself, “What is the property value of my home?” There are several strategies you can use to come up with a number.

The easiest way to determine your home’s value is to use online tools offered through banks and other financial institutions or real estate websites like Redfin or Zillow. These tools use public property records to estimate your home’s worth. These methods are fast, easy and free — you’ll get a helpful number within seconds. However, they may not be entirely accurate.

Real estate agents can also determine the value of your home based on a comparative market analysis. That’s when they compare your home to nearby homes that are for sale or have recently sold. They can consider nuances in your local market that might not appear in online tools. For example, they may know that a nearby house sold for a low price because the sellers had to move right away, and the price doesn’t accurately reflect the market. Many agents offer to provide comps and an estimate of your home’s value at no cost.

A professional home appraisal is your best bet for finding the most accurate property valuation. In this process, an appraiser comes to your home and physically documents your house inside and out, then factors in aspects like your floor plan, square footage, repairs needed, surrounding neighborhood and similar home sales. They combine all of this information to estimate your home’s value. Home appraisals can cost from $250 to $1,200, depending on the size and value of your house and your location.

An Undervalued Home Means You Could Be Underinsured

Your homeowner's insurance is determined by your home’s appraised value. So, if your home is worth a lot more than it was when you insured it, and you haven’t updated your policy, you might not have the coverage you need if disaster strikes. Your coverage amount determines your “actual cash value” — or the “replacement cost” — of your home. That’s one reason it’s important to stay updated on your home’s value.

Home prices have been rising in many parts of the country. Over five years from 2018 to 2023, homeowners in Reading, Penn. saw their homes increase in value by 89%, according to Nasdaq. Those in Birmingham, Ala., saw an average increase of 91%, and homeowners in Detroit saw values increase almost 184%.

Similarly, if you’ve made improvements that could impact your home value, let your insurance agent know. An annual insurance coverage review with your agent is a great way to stay current on the value of your home.

An Overvalued Home Could Mean Higher Taxes

Taxes on your home and property are based on your home’s assessed value, which is determined by your city, county or state. The assessed value is often different from your appraised value. The assessed value reflects how your property will be taxed, not necessarily what it’s worth on the market. 

You’ll receive your assessed home value annually, but you can also access it on your local city, county or state assessor’s website. It’s important to keep track of this number to avoid being overtaxed, as your home’s value changes with the real estate market. In most areas, if you feel your property assessment is too high, you can contact the government agency in charge of assessments to see if you can have it re-evaluated.

Protect Your Home Today

Your home is one of your most valuable assets, and knowing what it’s worth can help ensure you protect it properly. By knowing your property value, you can feel confident you have the protection you need if the unexpected happens. 

If you’re not sure whether your home is valued properly and you want to be certain you have the coverage you need, reach out to a Farm Bureau agent.