What determines your home's value
Your home's value is what a buyer would likely pay for it right now, based on what similar homes in your area have sold for recently. It is not what you paid for it, what you owe on your mortgage, or what you think it should be worth. The market price depends on four main things: the condition of the house itself, the neighborhood it sits in, recent sales of comparable homes nearby, and current demand from buyers in your area.
A home in good repair with updated systems (roof, plumbing, electrical, HVAC) is worth more than an identical house needing major work. Location matters enormously — the same square footage in a neighborhood with good schools, low crime, and walkable amenities will sell for far more than in a declining area. The sales prices of homes similar to yours that closed in the last three to six months give you the most reliable picture of what yours is worth today.
Key Takeaways
- Online estimates from Zillow, Redfin, or your county assessor are free starting points, but they can be off by 5 to 20 percent because they use incomplete data.
- A real estate agent's comparative market analysis (CMA) is more accurate because agents have access to actual sale prices and can account for your home's specific condition.
- A professional appraisal by a licensed appraiser costs $300 to $500 and is the most reliable method, required by lenders when you refinance or take out a home equity loan.
- Your county assessor's estimate is public record and free to check, but it is based on tax data and often lags behind actual market value by a year or more.
- The only way to know your home's true value is to sell it or refinance it, because that forces a real appraisal based on current market conditions.
Free online estimates and what they actually tell you
Websites like Zillow, Redfin, Realtor.com, and Trulia publish estimates of home values using public records, recent sales data, and automated models. These are free and take seconds to look up. They are useful for a rough sense of direction — whether your home is in the $300,000 range or the $500,000 range — but they are often wrong by thousands of dollars because the models do not know the true condition of your house, recent renovations you made, or specific features that matter to local buyers.
Each site uses a different formula, so you will often see different numbers on different platforms for the same house. Zillow calls its estimate a "Zestimate." Redfin calls theirs an "Estimate." These tools are designed to drive traffic to real estate agents, not to give you a precise number. They work best in hot markets with lots of recent sales data and worst in rural areas or neighborhoods where homes rarely change hands. If your home is unusual — a custom build, a historic property, or one with major recent work — the online estimate may be significantly off.
County assessor records and tax assessments
Your county assessor maintains a public record of every property in the county, including an assessed value used for property tax calculations. You can look this up for free on your county's website, usually under "property records," "assessor," or "GIS maps." The assessed value is public information and takes about five minutes to find.
However, the assessed value is not the same as market value. Assessors update values on a schedule — often every three to five years — so the number on file may be a year or two behind what your home would actually sell for today. Assessed values are also capped or adjusted differently depending on your state's tax laws. In California, for example, assessed value is frozen at the purchase price and rises only 2 percent per year, which means it can lag far behind market reality. Use the assessor's number as a data point, not as your home's current worth.
Getting a comparative market analysis from a real estate agent
A comparative market analysis (CMA) is a report prepared by a real estate agent that lists homes similar to yours that sold recently in your area. The agent pulls actual sale prices from the Multiple Listing Service (MLS), a database that real estate professionals use. A CMA typically includes five to ten comparable homes, shows what they sold for, and explains why your home might be worth more or less than each one.
A CMA is more accurate than an online estimate because it is based on real closed sales, not automated guesses, and because the agent can account for specific features of your home — a renovated kitchen, a finished basement, or deferred maintenance — that the algorithm cannot see. The agent has also walked through comparable homes and knows the local market. You can get a CMA for free by calling a few local real estate agents and asking for one. They offer them hoping you will list your home with them, so there is no charge. A good CMA will take the agent 30 minutes to an hour to prepare and will come with a written report you can keep.
Professional appraisals and when you need one
A professional appraisal by a licensed appraiser is the most reliable way to know your home's value. The appraiser inspects the property inside and out, measures the square footage, notes the condition of major systems, and compares it to recent sales of similar homes. The appraisal report is a detailed document that lenders use to decide how much they will lend you. It costs between $300 and $500 depending on the home's size and your location.
You need an appraisal when you refinance your mortgage, take out a home equity loan, or apply for a home equity line of credit (HELOC). The lender orders and pays for the appraisal, so you do not pay out of pocket in those cases. If you want an appraisal just to know your home's value — not for a loan — you can hire an appraiser directly through your state's appraiser board or by asking a local mortgage lender for a referral. The appraisal is binding only for the lender who ordered it; if you order one yourself, it is yours to use however you want.
Why estimates differ and which one to trust
You will often see different numbers from different sources, and this is normal. An online estimate might say $425,000, a CMA might say $440,000, and an appraisal might come in at $435,000. These differences happen because each method uses different data, different timing, and different assumptions about what makes homes comparable.
If you are trying to decide whether to refinance, take out a home equity loan, or list your home for sale, a professional appraisal is the most reliable. If you are just curious about your home's ballpark value, a CMA from a local agent is your best free option. Online estimates are useful for a quick sense of direction but should not be your only source. The truth is that your home's value is not fixed — it is what someone will actually pay for it on the day you sell. Everything else is an educated guess based on incomplete information.
What affects your home's value over time
Your home's value changes based on the broader real estate market, your neighborhood's desirability, and the condition of the house itself. A rising market lifts most homes, but some neighborhoods appreciate faster than others. Schools, job growth, crime rates, and new development all influence whether your area is becoming more or less desirable to buyers. At the individual property level, major renovations — a new roof, updated electrical, a remodeled kitchen — can increase value, while deferred maintenance decreases it.
You cannot control the market or the neighborhood, but you can control the condition of your home. A well-maintained house with no obvious problems will hold its value better than one with a leaky roof or outdated systems, even if both are in the same area. If you are thinking about selling in the next few years, focus on repairs that buyers notice and care about — not cosmetic upgrades that may not pay for themselves.
Frequently Asked Questions
How often should I check my home's value?
If you are not planning to sell or refinance, checking once a year is plenty. Home values do not change month to month in most markets. If you are thinking about refinancing or selling, get a fresh estimate or CMA every few months, because market conditions can shift and interest rate changes affect what buyers can afford.
Is my home worth what I paid for it?
Not necessarily. If you bought five years ago and the market has appreciated, your home is likely worth more. If the market has declined or your neighborhood has changed, it may be worth less. The purchase price is just a historical fact — it has no bearing on what the home is worth today.
Can I use an online estimate to refinance?
No. Lenders require a professional appraisal ordered through them, not an estimate from Zillow or Redfin. The appraisal protects the lender by confirming the home is actually worth what you are borrowing against. The lender will order and pay for the appraisal as part of the refinance process.
What if my home is unique or historic?
Automated estimates and standard CMAs work poorly for unusual homes because there may not be enough comparable sales to establish a pattern. In this case, hire an appraiser who specializes in historic or custom properties. They can account for features that standard models miss and provide a more accurate value.
Does improving my home always increase its value?
Not dollar for dollar. A kitchen remodel might cost $30,000 but add only $20,000 to your home's value, depending on the market and the quality of the work. Repairs and maintenance protect your home's value but do not always increase it. Focus on repairs that prevent problems rather than on upgrades that may not pay for themselves when you sell.