Comments on: Calculating Net Worth: Does Home Value Belong There?

By: J. Money

J. Money — Tue, 19 Jul 2016 19:15:55 +0000

In reply to Richard.

That’s a pretty good way of doing things, actually! I wasn’t even including selling % in our net worth…

We’ve since sold our house since this posting and very much enjoy renting (freedom!!!!), however for the past 7+ years of owning it we found using our realtor’s calculation was the most accurate. And when we actually did sell it we were spot on with the purchase price! Maybe you can befriend a realtor to help out once a year? We didn’t update it much outside of that…

By: Richard

Richard — Thu, 14 Jul 2016 18:50:44 +0000

I do the same as Tom. But how do you easily get a value for the home? I have been using Zillow and subtracting 20%. Then I subtract an additional 10% for selling expenses. Looking at actual sales in last 3 months, and calculating a price per square foot I get a larger value. Even using the lowest number from a foreclosed fixer upper. The house is a large part of my retirement plan. Therefore, I am trying to keep the numbers realistic. The current difference between the lower estimated value and mortgage+ selling expense s $130 k in my favor. :-)

By: J. Money

J. Money — Wed, 21 Nov 2012 19:39:25 +0000

Ooh I like that! I agree that the house probably needs to go in the calculations, esp. since you need something to offset the mortgages too which need to go in there, but hadn’t thought about including more into the house’s value like you’re doing. That’s a good way to think of it, thanks man!

It sucks all the other comments here got wiped away when I moved blogging platforms a cple years ago, but maybe you’ll start a new discussion here for anyone who reads in the future :) So thanks!

By: Tom

Tom — Wed, 21 Nov 2012 15:35:51 +0000

Hi – I definitely think a house value (realistic sale price- minus remaining mortgage) should be part of Net Worth. Net Worth to me implies all assets minus liabilities … and should not factor in liquidity. That could be a subset of the Net Worth.. your liquid or semi-liquid net worth … and not include house.

But to calculate my House Value … I also factor in the cost of selling … 6% to real estate agents, etc. and to be very conservative … I factor in 10% selling costs (real estate agent; some pre-sale fix up; lawyer fees; moving, etc.)

Using an easy example. Let’s say you own a house that would sell for $500,000. Your remaining mortgage on it is $250,000. I would take the $500,000 – subtract 10% selling cost or $50,000 … leaving $450,000 .. then subtract remaining mortgage of $250,000 which gives you $200,000 net house value to add to your net worth.

If your house goes up in value 10% over the years to $550,000 in this scenario, then the 10% selling goes to $55,000 …. minus the remaining mortgage of $250,000 … you would have $245,000 net house value to add to your net worth.

By: mike

mike — Fri, 30 Apr 2010 02:06:45 +0000

Personally, I believe including your home depends very much on if you anticipate selling it in the future and down sizing or some other “change during retirement” plan. If someone intends on dying in the house they are currently in, they should not include the home in their net worth.