Are you curious about what your house will be worth in several years? Or, maybe you are looking at purchasing a property but need to know what it may be worth in the future? Whether a home is an investment or owner-occupied property, being able to predict the possible future price of a property is a valuable skill to acquire. Here we will show you how to predict the future value of your home.
How are Home Values Calculated?
This is the most critical question to ask before trying to figure out a home’s current and future value. Many homeowners are not aware of the process used to determine what a home is worth. Appraisers use recent home sales in the area to ascertain the value of a property.
The properties used in the appraisal process have to be similar in size, bathroom and bedroom count, and alike in practically every way. The houses must be within a distance determined by the state and county of the subject property.
Get a CMA
Before you can predict the future cost of a home, you need to know what the current value of the property is. One way to do this is to have a comparable market analysis (CMA) done by a certified real estate agent. If you are working with a realtor, they will generally conduct this analysis and send you the completed report. There is a lot of information to be gathered from the CMA. This report will give a pretty accurate current pricing of the property.
Consult with an Appraiser
Appraisers are the professionals tasked with the responsibility of determining home prices are at any point in time. Appraisers will conduct a full appraisal for you. If you recently purchased your home, you likely had an assessment done before the purchase was completed. Use the estimate to see the cost factors and current value of the house.
Evaluate Comparable Properties
You can conduct a brief market analysis using the multiple listing service (MLS) to search for comparable homes. This database is used by all realtors to list the properties they are currently selling on the market. Finding properties that have similar profiles in the same neighborhood and focus on the features that have sold within the last nine months. The results of this search will give you a good indication of the current value which we will use to predict the future value of the home.
Use the Compounding Calculator
There are value appreciation calculators available online that will do the calculations for you. You enter the numbers it the requested fields, and the calculator does the rest. These calculators account for the annual appreciation or decline of the property value. Just as there is the home affordability calculator that helps you figure out how much house you can afford, the compounding calculator helps with making future value predictions.
Predicting the future value of your home with these methods is not something that is to be taken too seriously. There is genuinely no way to be sure what direction the market will blow over the busy years. The best thing you can do is use the assistance of industry professionals when you are in doubt.