Financial Wellness

What is Your Home Really Worth?

The effect of algorithms on your home's value

Unless you've recently had your property appraised, you really don't know the exact value of your home. But wait, your inbox gets monthly reports from popular, unbiased, independent websites detailing your price per square foot, neighborhood statistics and recent sales. Isn't that my home's value or close to it?

Home values are being estimated using property valuation tools. Instead of being used as a true market indicator, valuations from sites like Zillow, Redfin, and Trulia provide an estimated market value, or better yet, a starting point.

Your real estate property valuation is calculated in seconds using mathematical modelling coupled with database information including comparable home sales, tax assessor's value, sales history, transaction history, and current inventory to determine a property’s value at a specific point in time.

Algorithms use various indexes, which are weighed and analyzed to generate a price estimate. It's fast, cheap and ballpark accurate.

However, there's a lot more to it for neighborhoods with custom homes, differing views, and areas where public record data sources are unreliable. In general, the more complex the property and market, the less reliable the automated valuation model.

Remember, the market value is what someone is willing to pay for your home. It's a good idea to know what your home is worth. Zillow's property valuation tool, Zestimate®, estimates your home using a proprietary formula. As an automated system, it can't think for itself. In a seller's market with a low inventory of homes, rarely does assessed home value correlate to market value.

Assessed values serve the purpose of collecting taxes and in many cases trail the actual market value of a home. The recent sale prices of nearby homes are also useful when you are buying or selling. Known as comparable sales, they can be a major factor in how a real estate agent prices a home. The problem is, these "comps" need to be considered for what they actually are — not as indisputable numbers.

7 factors that can influence your home's value


Golf courses, parks, and shopping centers add value to a home. Easy access to freeways and highways is also a key consideration.


Whether it's a guest house or pool house, having a separate living space can increase a home's value and be considered as a possible income stream.


Your neighbor's manicured lawn brings value, but jalopy cars parked in your neighbor's driveway do not. It's not a shocker that tree-lined streets, a front lawn, and a backyard add value.


Research isn't clear whether home prices influence school system investment, or whether quality schools influence home prices, but either way, school quality significantly affects home values.


Crime rates, similarly, are negatively correlated with home values in the neighborhood. Neighborhood watch groups, private security, gated homes or communities provide peace-of-mind and generally add value to a property.


Price per square foot and traditional, neutral layouts add value to a house. Obscure layouts and tri-level homes appeal only to niche buyers.


Newer homes will sell for more than older homes because they typically require less maintenance. However, an older home that's been well-maintained or boasts significant upgrades may sell for just as much as a newer home.

Condition matters. A home's foundation, structural integrity, electrical work, plumbing, and fixtures are all worth considering.

The current state of the housing market will also influence a home's value. Home prices are shaped by supply and demand and may fluctuate based on subtle changes in your area's economy. The more time you spend looking at, valuing, and comparing homes in your specific area, the better you'll get at making accurate projections of your home's potential value.

Case by case, consider your valuation options. If selling, it's often worth hiring a formal appraiser to provide a second opinion and reinforce your valuation. If refinancing, check with your lender for recommended options and solutions.

You won't find answers to all your questions in one place. Start with a visit to our online Real Estate Loan Center for useful features to help you understand your options, estimate payments and compare rates and terms.

Current CEFCU rates can be found on our Real Estate Loan Center. Real estate loans are available only for residential properties in the state of California. Certain exceptions may apply for jumbo loans or property types. Property insurance is required. All loans subject to credit approval. Rates and terms are subject to change without notice. CEFCU is an Equal Housing Lender. NMLS #626590.