Figure Out Your Home’s Worth With a CAGR Calculator

home on green lawn with for sale sign

If you have ever purchased your own home, then you know that it was a major investment. And, when the day comes and you’re ready to sell it, you’ll want to be sure that you’ll be getting back that initial investment and then some. The question now is, “What is the value of my home?”

Well, there are a few different factors that can impact a home’s value which are worth knowing about. You can also get a general estimate of your home’s current worth using free online tools, including a CAGR calculator. Having that information and that number value in mind can help you determine if it’s really a good financial decision to sell at this moment.

Reasons to Sell Your Home

Let’s first back up a little and look at some reasons you might want to sell your home in the first place. Making a big decision like this shouldn’t be taken lightly so you want to ensure that there are solid motivations behind your desire to sell.

Here are some of the most common reasons to sell your home:

  • High Home Equity: Home equity is the market value of your home after subtracting anything you owe on it, or essentially how much of your home you own. If you don’t have high home equity, you may end up owing more money than what you can sell your house for.
  • Lifestyle Change: Your current home doesn’t suit the needs of your lifestyle anymore (for example, maybe your family is growing or your children have left the nest).
  • It’s Not Worth It: For whatever reason, you don’t want to be tied to a home and a mortgage anymore, along with any property taxes you owe on it.
  • Strong Demand: The market is hot with buyer activity and you’re expecting some nice competition for your house. Or, there aren’t enough options for the number of prospective home buyers out there so it’s easier to grab buyers’ attention with your property.

Factors that Influence the Worth of a Home 

The longer you’ve had a home, the more sentimental worth it may have to you, but alas, that’s not the kind of influencing factor you should be looking at. These are some factors that can play a huge role in determining your home’s worth:

  • Age: Generally speaking, if your house is newer, it’ll be deemed worth more because there’s less possibility for necessary immediate repairs.
  • Size: Since price per square foot is used for a home’s value, the bigger your house, the more likely it is that you can sell it for more.
  • Condition: Even if your house is new, if it needs some serious maintenance and repairs, that will bring down the value of your home.
  • Sales History: Your home value will be estimated based on the sale prices of other homes in your neighborhood as well as the historical sale prices of your own house.
  • Location Assessment: Your neighborhood may not be the same as it was when you bought your house. The details on local schools, workplaces, recreation areas, crime rates, transit options, demographics, and planned developments will all be considered.
  • Upgrades and Renovations: Depending on the quality and universal appeal of your home renovations, it could either help or hurt your house’s worth.

How to Check Your Home’s Value

Now that you understand some of the other factors at play in your home’s value, it’s time to check the numbers. Online valuation tools are a good place to start. For example, Zillow offers a home valuation tool that uses a proprietary formula along with public and user-submitted data to give you an estimated market value for your home. And, Chase has its own home value estimator, too.

Remember, free tools like these are just a starting point. To get a more accurate home value estimate, it’s recommended that you speak to a real estate professional or professional appraiser so they can perform a more detailed analysis.

feet in slippers on table in front of fireplace with mug

Use a CAGR Calculator with Your Home’s Worth

When you have an idea of your home’s current worth, you can then go a step further and calculate what that means in terms of your investment return. A good place to get a general estimate of this is a simple online CAGR calculator. So, what is CAGR? CAGR stands for “compound annual growth rate,” and this metric is used to measure the rate of growth of an asset.

With GIGA Calculator’s CAGR calculator, all you have to do is plug in the initial value of your house, the expected final value of your house, and the number of periods your value has been growing over. The calculator will then deliver a CAGR percentage and total growth in dollars. 

For example, say you bought your house for $200,000 (initial value) and learned that now 10 years later (number of periods) from your initial purchase, it’s worth $350,000 (final value). Your CAGR is 5.756% with a total growth of $150,000, which is important for you to think about when pricing your home for sale.

Understanding the Investment Numbers

What’s considered a good annual growth percentage or good home value appreciation varies depending on several factors like the home’s area and property type as well as how much you bought it for and whether or not it was a good deal at the time. All things considered, the compound annual growth rate of the investment for your home is a great tool to use for a general review.

Additionally, when looking at your CAGR, don’t forget to factor in things like any adjustments based on inflation, taxes you’ve paid on the home, and money you’ve put into renovations.

Conclusion: Should You Sell Your Home?

While it boils down to a personal decision, you want to look at the numbers regarding your home’s value and return on investment. Within these numbers, you’ll want see that you have a positive growth percentage and ideally enough money to at least pay off your mortgage and provide an significant down-payment on a new house or whatever it is you plan to do. Of course, if you’re able to get even more money back to cover things like moving costs, that’s another check in the column for selling your home.

Never forget that your house is an asset and reviewing its value with tools like a CAGR calculator will help ensure you’re making a wise financial decision based on numbers, not just emotional attachment.

This entry was posted in Finance, Mathematics, Money and tagged , . By Cindy Brzostowski