You know how much you paid for your home, and you likely factor the work you’ve done and the memories you’ve made there into your idea of what it's worth. But while your home may be your castle, your personal feelings toward the property and even how much you paid for it a few years ago play no part in the value of your home today. In short, a house’s value is based on the amount the property would likely sell for if it went on the market. Why Should You Know the Value of Your Home? You should have a grasp of the value of your home in a variety of situations: if you're getting ready to sell your house, looking to refinance your mortgage or buying a new homeowners insurance policy, for example. Your Guide to the Housing Market Breaking down buyer's and seller's markets, forecasts for home prices and how the housing market affects your financial situation. Devon ThorsbySept. 13, 2019 For a better understanding of what your home’s value means, how it may change over time and what the impact may be if the market shifts significantly in your neighborhood, city or even the whole country, here’s our breakdown. What Is the Value of My Home? If your property value is based on what a buyer is willing to pay for it, all you have to do is find someone willing to pay as much as you think it’s worth, right? Determining a home's value is a bit more complicated. Keep in mind that buyers place no value on the good times you've spent there and might not consider your updated bathroom or in-ground swimming pool to be worth the same amount you paid for the upgrades. And even if you find a buyer willing to pay $350,000 for your home, the value of your house isn't necessarily $350,000. Ultimately, the financial backing in a deal determines the property’s value, and it’s most often a mortgage lender making the call. Property valuation primarily takes into account recent sales of comparable properties in the area. Key identifying factors are the same square footage, number of bedrooms and lot size, among other details. Professionals who determine property values for a living compare all the details that make your house similar and different from those recent sales, and then calculate the value. But when your property is unique – maybe it’s a triangular lot or a four-bedroom house in a neighborhood full of condos – determining the value can be more difficult. [ READ: Why You Should (and Shouldn't) Sell Your Home in 2021 ] The individual, group or tool appraising the property may also influence the outcome of the appraisal since they all appraise properties differently for a variety of reasons. Here’s a look at common appraisal scenarios. Lender Appraiser In the case of a property sale, the appraisal often happens once the property has gone under contract. The lender will hire an appraiser to complete a report on the property, getting all the details on the house and its history, as well as the details of similar real estate deals that have closed in the last six months or so. If the appraiser comes back with a valuation below that $350,000 sale price you’ve agreed upon, the lender will likely state that it is willing to lend an amount equal to the property’s value as determined by the appraisal, but not more. If the appraisal comes in at $340,000, the buyer has the option to come up with the $10,000 difference or try to negotiate the price down. Many sellers are open to negotiation at this point, knowing that a low appraisal likely means the house won’t sell for a higher price once it’s back on the market, though excessive interest in a property may be able to sway an appraiser.

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