What’s a Home Actually Worth?

It’s easy to look up how much money you have in your savings account or the real-time value of your stock investments. But determining the dollar value of a home is more complex, especially when you are a mortgage loan officer.

When trying to determine a property’s worth, you need to be able to value it accurately. After all, the value of that property will indicate how much a home buyer may need to borrow in order to purchase that home. Overvaluing a home may prevent that sale, and create some very disappointed clients! But you don’t want to undervalue the home either. Getting it right is part of your work.

So what can you do to get it right? First, start with the three different types of home values:


When you start the process of processing a mortgage application, several phrases will come up frequently: appraised value, assessed value, and true market value. It’s important to know the difference between each one so you can make better, more informed decisions.

Appraised Value

A professional appraiser is in charge of determining the apprised value of a home. You need these appraisals when a buyer needs to finance the purchase. But there is one common misconception that you need to stress to your clients: the appraiser does not work for the lender.

An appraiser needs to be an objective, licensed professional who doesn’t have allegiance to the buyer, seller, or the lender — regardless of who is paying their fee.

The number the appraiser comes up with – which is the appraised value – helps you determine whether or not the buyer is overpaying for the property. For example, imagine a seller listing a home for $400,000. They reach a deal with the buyer to sell the home for $375,000. However, if an appraiser evaluates the property and determines that the appraised value is actually $325,000, then the lender will not lend for an amount higher than that appraised value of $325,000.

When figuring out this number, an appraiser will compare the property to similar homes in the neighborhood, and they’ll evaluate factors such as location, square footage, appliances, upgrades, improvements, and the interior and exterior of the home.

Assessed Value

The assessed value of a home is determined by the local municipal property assessor. This value matters when the county calculates property taxes each year. The lower the assessed value, the less property tax the buyer has to pay.

To come up with this value, your assessor will evaluate what comparable homes in the neighborhood have sold for, the size of the home, age, overall condition, and any improvements or upgrades that have been made. However, most assessors don’t have full access to the home, so their information is limited.

Assessments are done annually to determine how much property tax is owed. Many counties use a multiplier (typically between 60%-80%) to calculate the final assessed value. So, if the assessor determines that the value of the home is $300,000, but the county uses a 70% multiplier, the assessed value of the home would be $210,000 for tax purposes

If the assessed value isn’t as high as the home buyers had hoped for, they can appeal their assessment in favor of a lower valuation so that they can save money on property taxes.

True Market Value

True market value is established by the real estate agent involved in the transaction. It basically refers to the value that a buyer is willing to pay for the property. A good real estate agent is an expert in determining true market value because they have hands-on experience buying and selling properties. They understand the mindsets of buyers in your market and know what they’ll pay for a desirable house, townhouse, or condo.

Knowing the true market value is important because it helps buyers and sellers arrive at a fair price.


When figuring out a home’s value, a buyer or seller might be tempted to see what popular real estate sites like Zillow, Redfin, and Trulia have to say using an online calculator. And that is completely fine, as long as they realize it is just an estimate. It’s not an actual appraisal or the “true market value.” These sites all have their own algorithms for coming up with their estimates. For example, Zillow comes up with its “Zestimates” by calculating “public and user-submitted data, taking into account special features, location, and market conditions.”

These online estimates can be a great starting point for opening up the conversation with your home buying client. But ultimately, buyers and sellers need to use a real estate agent for coming up with the actual market value of a home. Even these sites say that they should still get “a comparative market analysis.”

Having an agent involved in this process is essential because they understand the market better than a computer ever could. They’re showing property in your city every single day, and they know the particular preferences of buyers and sellers in the area. Young professionals, large families, empty nesters, and other groups are all looking for different things in a home. A local agent has most likely worked with all of them, so they understand what every segment in your market is specifically looking for.


So, how does an actual real estate agent determine true market value? They’ll start by doing a comparative market analysis (CMA). This means they’ll compare a home’s features to similar properties in the area. For the CMA, the agent looks at the below factors to influence their assessment of a home’s worth:

●  Neighborhood sales – The agent will look at similar, recently sold homes in the neighborhood to see what they sold for and what they have in common with the house.

●  The exterior – What does the home look like from the outside? The agent will factor in curb appeal, the style of the house, the front and backyard, and anything else that impacts how the house looks to everyone walking and driving by.

●  The interior – This is everything inside the walls of the house. Square footage, number of bedrooms and bathrooms, appliances, and more all influence the overall market value.

●  Age of the home – Whether the home is newer or older affects the number the agent comes up with as part of their assessment.

●  Style of the home – The style of the home is important because buyers in different markets have different tastes. If buyers prefer ranch-style homes and that’s the one available, then the home may sell for a premium (aka more money!).

●  Market trends – Because a local agent has so much experience in your market, they have their finger on the pulse of the area’s trends and know what buyers are willing to pay for a similar property.

●  Location, location, location – This one’s probably the most obvious. The agent will think about how popular the area is, how safe it is, and what schools are like. A computer algorithm simply can’t take all of these factors into account when calculating the value of your home. The reality is nothing beats the accuracy of a real estate agent or professional appraiser when it comes to determining a home’s true market value.


Actually, the above statement isn’t entirely true. Yes, nothing beats the accuracy of a real estate agent when it comes to determining the value of a home, but there are newer, more flexible ways that can be used to determine that value. And that’s through the use of HomeBots.

What is a HomeBot, you may be asking? Well, it is a technology that allows you to keep track of the value of homes – but without the need for comparative market analysis. It can do a variety of things, such as track home equity, offer a customized financial strategy for each client, and provide more financial information that drives valuable discussions about home buying and selling. It creates greater engagement with buyers and sellers and helps you grow your client base – which is a win for everyone involved.


Determining a home’s true market value is a necessary part of any home transaction. Using our HomeBots, you can determine that value to help your clients succeed in their home transactions without the hassle. Contact the Ventura Team to help get started with HomeBots today. Simple. Easy. Engaging.

Homebot Intro for Homeowners| Dan Ventura | NMLS 19372 | FIMC NMLS 2289

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