Many of us purchased our homes years ago. A lot has changed since then and it can be difficult to predict how much money we would have from the proceeds of the sale of the home we currently own. We may go to Zillow.com or Realtor.com and look at the estimates these sites provide and have somewhat of an idea. Yet, those estimates are educated guesses at best. Here is our guide to help you understand a more accurate estimate of the equity that you have in your home through a few easy steps.
Locate your mortgage pay off balance
This is the amount you would have to pay the bank if you wanted to pay off your home completely. If you own your home out right then this number is simply zero. You can find this by calling your lender or often times by logging on your lender’s website.
Get an accurate assessment of the value of your home.
Many will trust a bank appraisal of their homes value. This document can mislead you because the goal of the bank appraisal is to satisfy bank regulators instead of providing you a reality look at the value of the home. Secondly, the method of which an appraiser values the property is based on comparison properties in your specific neighborhood. This is no longer how home buyers shop for a home. Internet technologies has changed buyer’s behavior and they often shop a 5 to 10 square mile area around where they work, shop and kids go to school. This may cause you to believe you can get more or less than the property is actually worth.
Websites like Zillow.com and Realtor.com also provides estimates. These may be even more misleading as it is unable to take into account the condition of the property. It uses an alogrithm based on tax records and other sources. In our market, those estimates are almost always inaccurate.
The best way to value your property is to ask a trusted REALTOR® to help you shop for similar properties near your home (up to a five mile radius) then decide together on an accurate estimate based on current market conditions. This is a service we provide at no charge, whether you are selling your home or not. Simply call or write us to get started.
Calculate your selling costs
These are the transaction costs incurred in repairing, marketing, and transacting your home to another buyer. Again, a professional who knows both the construction industry and the real estate market makes the most sense in determining this. A good rule of thumb in our market is 7.5% of the sale price of your home if you do not need any repairs.
To get a true estimate of the equity in your home the formula goes like this:
Accurate Home Value – Mortgage Payoff Balance – Selling Cost = True Equity
If you are curious and would like a accurate estimate of the equity in your home. Call us or contact us here. We would love to help you.