# The Money Mustache Community

## Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: BoulderTC on August 21, 2013, 09:11:48 AM

Title: Calculating net worth with mortgage
Post by: BoulderTC on August 21, 2013, 09:11:48 AM
I know there's tons of threads on net worth on here, and I've read them and realized everyone has a slightly different way of calculating it. So I don't need to start that debate again. My question is... for those of you who track your net worth on a daily basis (or so it seems), how do you know the value of your home in such a dynamic market? Do you just use the last tax appraisal you received? Or your purchase price? Or some other thing?

For reference, my husband and I are in a transition. We'll be paying off the student loans entirely in the next few weeks and are looking at all our options for what to do with our newly freed-up money... so I'm still in the analysis stage and thinking about all the metrics now.

Thanks for all your help, MMM community!
Title: Re: Calculating net worth with mortgage
Post by: bo_knows on August 21, 2013, 09:14:34 AM
Conservative numbers would be your last appraisal (for taxes) or the number given on Zillow.com.  Though, as I'm sure you know, your house is only worth as much as someone is willing to pay for it... and that's a tough number to nail down.

I use a number somewhere between zillow.com and the average of recent purchase prices in my neighborhood.
Title: Re: Calculating net worth with mortgage
Post by: BoulderTC on August 21, 2013, 09:27:02 AM
Interesting. Thanks for the feedback. I thought of zillow.com, but don't trust it because it doesn't have the specs of my house correct since it's been remodeled. We bought our house in October of 2012, and shortly after received a tax appraisal that was done in June of 2012. The appraisal quoted the value at \$6k more than we paid for it. So, our purchase price is more updated and conservative, but our appraisal was based on more actual data. And, for reference, zillow.com says our house is worth ~\$36k less than we paid.

So... I'm thinking maybe I should use our purchase price. You agree?
Title: Re: Calculating net worth with mortgage
Post by: avonlea on August 21, 2013, 09:35:46 AM
for those of you who track your net worth on a daily basis (or so it seems...

LOL!  I enjoyed that.  I track net worth on a monthly basis but that does seem often, I guess.

Conservative numbers would be your last appraisal (for taxes) or the number given on Zillow.com.

We like to be pretty conservative in our estimation of house value in the net worth picture.  We use the latest tax appraisal number (fairly accurate since the latest update occurred last year) and then subtract closing costs, realtor fees, and moving costs that we would have to pay if we were to leave the house.
Title: Re: Calculating net worth with mortgage
Post by: avonlea on August 21, 2013, 09:37:01 AM
I guess what I shared doesn't show the value on the market....just the value the house would be for us if we were to sell it.
Title: Re: Calculating net worth with mortgage
Post by: BoulderTC on August 21, 2013, 09:58:12 AM
Oh! Good point. That makes sense in the context of net worth because you're treating it as money that would be available to you. I like that method. Thanks. :)
Title: Re: Calculating net worth with mortgage
Post by: Dr. A on August 21, 2013, 12:03:05 PM
I'm in a Co-Op (a type of ownership unknown to many) so there is no tax assessment and no listing on Zillow. I apply the Case Shiller (non-seasonally-adjusted) index for NYC Condos.

This is probably... err... aggressive, but it's about the only thing I can come up with that doesn't rely on my own judgement, aside from carrying at cost. In my long-term planning, I assume that this method has overstated the price change by a factor of 2 and account for theoretical transaction costs to sell, in order to try to be conservative.