Just like any other asset, your home’s value is mainly based on what buyers in the market are willing to pay. Different home buyers have different ways of evaluating properties. For instance, college students will weigh locational factors like proximity to universities while valuing properties.
Similarly, a real estate investor will assess the size, market demand, and current condition of a home to evaluate it. While each homebuyer’s approach to evaluating properties is different, there are some common factors that always influence selling prices. Here are the most serious factors that impact your home’s value:
The best indicator of a home’s value is the selling prices of similar homes in the neighborhood. What properties have been sold recently in your neighborhood? This recency factor is the main detail home appraisers consider while evaluating homes. Real estate investors also rely on recent selling prices to ascribe realistic valuations to the properties they’re interested in acquiring.
Homes that offer more features typically cost more. The following features will seriously impact a home’s selling price –
- How many bedrooms the property has
- How many bathrooms the property has
- When the property was constructed
- The cumulative square footage of the entire property
Of course, the location plays a key role. For instance, two-story homes in rural areas won’t cost as much as single-story homes in urban hotspots.
Age and Condition of the House
New houses command higher values because they’re likelier to feature up-to-date plumbing, electrical arrangements, new appliances, etc. These newer structures and arrangements are less likely to break down. Hence, buyers feel a sense of assurance while investing in new houses.
Modern-day homebuyers don’t refrain from paying top-dollar for homes that are “move-in-ready.” These buyers hire property inspection experts to determine whether the homes they’re buying are actually ready for use or not. These inspectors detail all the major expenses the buyers may have to face after moving in.
The buyers then use these reports to negotiate for cheaper selling prices. They subtract all the expected expenses from the final selling prices to make discounted offers.
Home upgrades or renovations can significantly boost a property’s value. Even older homes with outdated features may sell for exorbitant prices if they feature recent upgrades or renovations. For instance, if you add a pool to your old property – its market price immediately increases. Kitchen remodels, bathroom renovations, and other home improvement efforts also help inflate the house’s final selling price.
Days-on-Market (DoM) is a real estate term used to describe how long a specific house has been on the market. The longer a house is on the real estate market, the lower its valuation. Buyers review the DoM metric to judge whether there’s something wrong with the properties they want to buy.
Properties that have been listed but not sold for long periods are likely to have some underlying problems. Just this perception of something being wrong with the house is enough to reduce its selling price.
Global Economic Conditions
The global economy plays a surprising role in a homeowner’s ability to sell his or her home. The housing market typically struggles in slower economic conditions. For instance, the COVID19 pandemic upset the home-buying process for several months. However, the home values across the globe quickly resumed their uptrend due to –
- Historically low mortgage rates
- Shortage of housing
- Work-from-home policies changing people’s attitudes to the idea of owning homes