Mortgage Daily

Published On: December 23, 2022

Approximately six years ago, property values in the United States began rebounding out of their post-recession trough, and some communities are exploding. However, you want to know, “How much is MY house worth?” There are various techniques to estimate the worth of your home:

  • Home Appraisal
  • Automated Valuation Model (AVM)
  • Comparative Market Analysis (CMA)
  • Broker Price Opinion (BPO)

Location is Everything

Location is the most influential aspect in determining the value of your home. It trumps square footage, quality, and features. The answer to “How much is my home worth?” in Manhattan or Beverly Hills will be vastly different than in Ames, Iowa, or Mobile, Alabama.

Consider two comparable properties in different regions of the country:

San Jose, California

According to, the most affordable single-family home for sale in San Jose, California, is a 2,032-square-foot property with three bedrooms and two baths. The asking price is $988,000.

Mobile, Alabama

A comparable home in Mobile, Alabama, with three bedrooms, two bathrooms, and 2,173 square feet, is listed for $169,900.

Several real estate websites report average prices, per-square-foot values, and regional trends.

Depending on their size, amenities, build quality, lot, schools, and other considerations, the property prices in your community may be greater or lower than average. Professionals in the real estate business assess these factors to determine a price range for your house.

Determining Your Home Value

There are four major approaches to assessing the value of a property. Their prices and degrees of precision vary. From least accurate to most accurate:

  • Home Appraisal
  • Automated Valuation Model (AVM
  • Comparative Market Analysis (CMA)
  • Broker Price Opinion (BPO)

Which option you select depends on your objectives. Each evaluation method has advantages and disadvantages.

Automated Valuation Model (AVM)

AVMs, which may be available online for free, estimate the worth of a property by evaluating local listings and public record data, identifying trends, and applying them to the subject property.

If previously sold, comparable-sized homes (“comps”) in your region are selling for ten percent more than when you acquired your home, your property’s estimated worth will likely exceed the purchase price by ten percent.

This is an elementary assessment.

The program cannot determine if you recently renovated your kitchen and added $50,000 in equity or whether your crazy neighbor spoiled your view by painting his garage Barbie pink.

An AVM does not necessarily “know” whether any of the comps were distressed sales, artificially reducing their prices, or if title problems damaged the value of a comp.

AVMs are valuable for displaying trends — the direction and magnitude of changes in area values — but they are far less effective for appraising particular properties.

Arturo Garcia, the chief operating officer and co-founder of Platinum Data Solution, asserts, “There might be a 20% to 30% to 40% difference in value between the appropriate and wrong AVM.”


A real estate broker or agent will always be able to provide you with a free (usually) assessment of your property’s worth — they do this often for potential home sellers.

Comparative Market Analysis (CMA) describes this customer sales presentation.

The CMA is only as accurate as the agent’s local expertise; agents generally “eyeball” property differences and make decisions based on their experience.

However, you should be aware that agents’ primary function is not evaluation; they may exaggerate your worth to obtain your listing.

Paying for a broker pricing opinion or BPO is a more accurate strategy. Brokers with BPOR certification from the National Association of Realtors have completed specialized training to perform this job. Lenders frequently commission BPOs to estimate the worth of foreclosed properties before sale.

To do a BPO, the broker reviews three recent local sales of comparable properties and three currently-listed properties, compares their condition and characteristics to yours, makes numeric modifications based on algorithms, and provides an estimated value.

A standard house BPO costs between $50 to $125.

Home Appraisal

Home appraisers are highly educated, qualified specialists who can calculate your home’s market worth. This is the approach to employ if you want to discover “How much is my house worth?” and are ready to spend a substantial sum for such information.

They check and measure your home, taking note of its condition, features, and any concerns that may affect its marketability, such as zoning, “unusual” floor designs, environmental dangers, renovations, delayed maintenance, and more.

How evaluations operate

There are three techniques to value that an appraiser may employ:

  • Market
  • Cost
  • Income

The market or comparable sales method is the most prevalent. The appraiser analyzes your house line-by-line to several recently sold surrounding properties similar to yours. Values are allocated to differences.

If you and your neighbors have similar homes on the same track, but yours has a view of the city lights while theirs overlooks a parking lot, your home’s value may be increased by $20,000 due to the view.

And if your neighbor’s roof is new and yours is not, you may be eligible for a $5,000 reduction. After all, changes have been accounted for; you have an appraised value.

The second method calculates the cost to acquire your property and construct a home similar to yours, then subtracts depreciation.

This approach is useful for determining the insurance value of a home.

For the revenue technique, an appraiser examines rental data to establish how much your house would rent for on the open market and then uses one or more formulae – generally gross rent multipliers or capitalization rates – to derive your property’s worth.

Investors and landlords most frequently employ this strategy.

The most accurate approach to establish the worth of your house is to have it appraised by a qualified expert familiar with the community. Typically, the cost of an appraisal ranges from $250 to $1,000, depending on the home’s size and the service’s intricacy.

How Much Is My Home Worth? It Depends

How should you respond to the inquiry, “What is the value of my home?” It depends on your reason for asking.

If you’re curious, check out a few AVMs to gain a broad understanding.

If you are considering selling, verify the AVMs and get a CMA from multiple agents. Keep in mind that their estimate may be slightly inflated.

A BPO is required if you want your lender to permit a short sale. Nevertheless, the lender would order and pay for it, so you may not choose to spend the money. BPOs are often utilized in legal hearings, including divorce cases.

When financing property with a mortgage lender, appraisals are nearly always necessary. You are entitled to a copy of the report and will be required to pay for it.

What Are the Mortgage Rates Today?

If your home’s value justifies a refinancing, current interest rates may make it worthwhile. Examine available programs and interest rates when evaluating property prices.


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