How to Follow Your Home Value like your Portfolio: A Comprehensive Guide

Your home is more than just a place to live; it’s also a significant financial asset. Following your home’s value is crucial, as you would a stock or bond portfolio. Keeping track of your home’s value lets you decide when to sell, refinance, or invest in improvements. This blog will explore various methods and tools to help you track your home’s value like a seasoned investor.

Understand the factors that influence your home’s value

Before we dive into the tools and methods available to track your home’s value, it’s essential to understand the factors that influence it. These factors include:

Location

Proximity to schools, parks, public transportation, and other amenities can significantly impact your home’s value. Desirable neighborhoods with low crime rates and well-maintained properties generally have higher home values.

Home size and features

The square footage, number of bedrooms and bathrooms, and features like a swimming pool or a modern kitchen all contribute to your home’s value.

Market conditions

Local real estate trends, such as inventory levels, interest rates, and economic growth, can also affect your home’s value.

Use online home value estimators

One of the easiest ways to track your home’s value is to use online home value estimators. Websites like Zillow, Redfin, and Trulia offer automated valuation models (AVMs) that estimate your home’s value based on location, size, and recent sales data.

Example: If you own a 3-bedroom, 2-bathroom home in Chicago, you can input your address into Zillow’s home value estimator to receive an estimate of your home’s current market value. Remember that these estimators are not always 100% accurate and should be used as a starting point.

Review comparable sales in your neighborhood

Another way to track your home’s value is to review comparable sales, or “comps,” in your neighborhood. Comps are recently sold homes similar to yours in size, features, and location. By comparing your home to these comps, you can understand its current market value.

Example: You can find comps by searching for recently sold properties on real estate websites or contacting a local real estate agent. Look for homes similar to yours in size, age, and features that have sold within the last six months.

Get a professional appraisal

You can hire a professional appraiser for a more accurate and detailed home value assessment. Appraisers evaluate your home’s condition, features, location, and market conditions to provide an unbiased valuation.

Example: You can find a licensed appraiser through the Appraisal Institute’s website or ask for recommendations from your mortgage lender or real estate agent. The cost of an appraisal varies depending on your location and the complexity of your property but can typically range from $300 to $600.

Monitor local real estate trends

Staying informed about local real estate trends is essential to track your home’s value effectively. Pay attention to factors such as inventory levels, average days on the market, and median home prices in your area. This information can help you gauge whether your home’s value will likely increase or decrease in the short term.

Example: You can find local real estate data through websites like Realtor.com and the National Association of Realtors, as well as through local newspapers and real estate publications.

Track your home equity

Your home equity – the difference between your home’s value and the amount you owe on your mortgage – is another important factor to monitor when following your home’s value like a portfolio. As your home’s value increases and you pay down your mortgage, your home equity grows, providing you with more financial flexibility and options.

To calculate your home equity, follow these steps

Determine your home’s current market value

Use the methods mentioned in this blog, such as online home value estimators, reviewing comparable sales, or obtaining a professional appraisal, to estimate your home’s current market value.

Find your outstanding mortgage balance

Check your most recent mortgage statement or contact your mortgage lender to determine your current due balance.

Calculate your home equity

Subtract your outstanding mortgage balance from your home’s current market value. The result is your home equity.

Example: If your home’s current market value is $400,000 and your outstanding mortgage balance is $250,000, your home equity is $150,000 ($400,000 – $250,000).

By tracking your home equity, you can make more informed decisions about refinancing your mortgage, leveraging your equity for a home equity loan or line of credit, or deciding when to sell your property.

Keep a record of home improvements

Investing in home improvements can increase your home’s value and, subsequently, your home equity. It’s important to record any upgrades, renovations, or maintenance projects you’ve completed, as they can impact your home’s value.

Example: If you’ve remodeled your kitchen, added a new bathroom, or replaced your roof, note the project details, including the date, cost, and description of the work done. This information can be helpful when estimating your home’s value and for tax purposes if you choose to sell your property.

Consult a real estate professional

If you’re serious about following your home’s value like a portfolio, consider consulting a local real estate agent or financial advisor. These professionals can provide valuable insights and advice on market trends, strategies for increasing your home’s value, and options for leveraging your home equity.

In conclusion, tracking your home’s value like a portfolio involves staying informed about local real estate trends, monitoring your home equity, and using online tools, professional appraisals, and expert advice. By doing so, you’ll be better equipped to make informed decisions about your most significant financial asset: your home.