Why should you know what your home is worth? You already own it, so what’s the difference, right? Well, whether you plan to sell it soon or stay put forever, knowing your home’s value and understanding the importance of property valuation are fundamental aspects of your financial situation for two reasons: insurance and taxes.
How Much is My Home Worth?
The easiest way to find out your home’s value is to use online valuation tools offered through financial institutions or real estate websites like Redfin and Zillow. These tools use public property records to estimate your home’s worth. And while you’ll get a helpful number, it may not be entirely accurate.
Real estate agents can also determine home value based on a comparative market analysis. However, a professional home appraisal is your best bet for the most accurate property valuation. This process 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.
An Undervalued Home Means Undervalued Insurance
Your homeowners coverage is determined by your home’s appraised value. This dollar figure is used to calculate coverage needed for “actual cash value” — or the “replacement cost” — of your home. It’s important to stay up to date on appraisals.
Home prices are on the rise across the country. Cities like Phoenix, Arizona, and Lincoln, Nebraska, saw prices jump around 8 percent in 2018. If you purchased your home a decade ago, chances are it’s worth nearly a quarter more than what you paid. 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 Means 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. It’s often different from your appraised value because it’s based on an assessment of historical sales of similar properties in your area.
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.
Protect your Home Today
Your home is one of your most valuable assets. By knowing your property value — and keeping your Farm Bureau agent updated — you can protect your home if the unexpected happens.