The key role appraisals play in your home buying process

Are you wondering what a home you’re thinking about buying is really worth?

The simple answer: A house is worth whatever a buyer is willing to pay. But the full picture depends on market conditions and who’s doing the valuation — whether it’s a lender, a real estate agent or the county tax assessor.

Learning how to estimate a property’s value using online tools and expert advice can help you make smarter decisions when buying your first home. It can also prepare you for future steps like refinancing, tapping into equity or even negotiating property taxes once you’re a homeowner.

Here are five ways to find out your home’s value.

A quick search for “how much is my house worth?” brings up many tools known as automated valuation models or AVMs offered by lenders and real estate platforms. Homes.com has its own home value estimation platform that can provide an in-depth comparison to similar properties, so you can understand the market trends.

Automated valuation models estimate property values using mathematical formulas that draw on public records such as property transfers, ownership deeds, tax assessments and recent sales of homes nearby.

Treat these online estimates as a helpful starting point, not a definitive answer. AVMs don’t account for a home’s condition, which can significantly affect value, and their accuracy varies by location. For a more complete picture, consult a local real estate expert or even a lender.

The Federal Housing Finance Agency’s House Price Index calculator is another way to get a quick estimate. This tool uses a “repeat sales” method, analyzing millions of mortgage transactions since the 1970s to track how a home’s value changes from one sale to the next. It then estimates market trends for your area.

Note: The Home Price Index calculator focuses on conforming mortgages (loans up to $832,750 or $1,249,125 in high-cost regions) for 2026 and doesn’t adjust for inflation or seasonality.

For a deeper dive, ask a local real estate agent or broker for a comparative market analysis. A comparative market analysis reviews your home and the local market to estimate value, typically for listing purposes. Agents often provide a comparative market analysis for free or at low cost.

While lenders require an appraisal before approving a mortgage, homeowners can hire an appraiser at any time. Appraisers consider factors such as:

• Location: The region, city and neighborhood  
  
• Property: Features, improvements and land  
  
• Comparable properties: Recent sales, listings, vacancies, costs, depreciation and more  

“The appraiser's more of a value focus, and they do look into things like minimum property requirements," Destinee Stice, vice president of purchase sales at NewDay USA, a national leader in veteran mortgage lending, told Homes.com in an interview. “So roof age, or their railings on steps. Are there chipping and peeling paint? Those are bigger ones," she said. "Is it livable, and is it worth what you're buying it for?”

Meanwhile, some lenders can also appraise the home. Stice noted that “most lenders will charge you up front.” The cost of an appraisal varies from about $300 to $600, but some lenders may pay for it.

“From the moment that it's ordered or picked up by the appraiser, it typically averages seven to 10 business days. And the seven to 10 business days would exclude holidays and weekends, so that's a big point,” Stice said.

All this information is combined into an official report stating the appraiser’s opinion of value. Appraisals are more thorough than online estimates, but not infallible. If you believe an appraisal is inaccurate, you can request a “reconsideration of value” through your lender.

Pro tip: “You can negotiate an appraisal gap,” Stice said. “If [the buyer and seller disagree] you can submit an official reconsideration of value, and you submit that to the appraiser's management team.”

Both appraisals and online value tools called automated valuation models rely a lot on recent sales of similar homes, often called “comps.” Even if you’re new to the process, looking at comparable properties yourself is a smart way to get a sense of what homes are worth, without paying for an appraiser. Just remember to be thoughtful and realistic as you compare.

Since you don’t own a home yet, start by searching for homes in your target neighborhood that are similar in size, style and condition to what you want to buy. Real estate websites that show Multiple Listing Service or MLS listings are a great resource for finding recent or pending sale prices.

If there aren’t enough recent sales, you can look at listing prices, but keep in mind these may not reflect what homes actually sell for.

Pro tip: "Try to find at least three solid comps to get a realistic price range for homes you’re considering. Notice differences between the homes like an extra bedroom or newer kitchen and adjust your expectations up or down accordingly,” Stice said.

It’s also helpful to work with a real estate agent or broker who can help you find the best comparable properties and explain what the numbers mean.

Price data can become outdated quickly, so focus on the most recent sales for the most accurate estimate.

Estimating the value of the home you want to purchase helps you decide on an offer. For sellers, knowing your home’s value is key to setting a listing price and estimating your potential equity.

“It's never recommended to waive something,” Stice said. “It's there for a reason, right? And appraisal is there to protect your investment in several ways, if you waive an appraisal, you're going in blind when it comes to the biggest investment you're making.”

But home value matters beyond buying or selling: It affects refinancing, home equity lines of credit and annual property taxes. Understanding your home’s value gives you more control over these financial decisions.