When you’re selling or buying a home, it's important to assess the current market value to either maximize your profits or make a good investment. If you’re the seller, it can feel overwhelming trying to understand how to determine home value. You don’t want your house to be sold at a lower price, especially if you've done any upgrades or renovations. If you’re the buyer, you have to consider how much you’re willing to pay, as you need to assess factors such as location, school districts, and community safety.
This blog will help you understand some of the main factors that go into determining the value of a property, whether you are selling or buying a house.
How to Determine Home Value: 7 Factors to Consider
So, what exactly plays a role in the value of a home?
The first factor that you should consider is location. (You know what they say: Location, location, location.) Houses near cities tend to cost more than those located in rural areas. A perfect example is the housing prices in large cities like New York City, San Francisco, and Boston. They will cost more than homes in other parts of the country. The house becomes more desirable if it’s got an attractive view and is in close proximity to city commercial centers, tourist destinations, and public transportation options.
Plus, the location of a home is one thing you can't change. So, a great location can be incredibly valuable.
2. School District and Employment Opportunities
In addition to location, what appraisers also consider is the quality of the schools and employment opportunities in the area. These factors can influence some communities to increase their prices since schools can make or break the value of a home. Oftentimes, buyers and families are willing to pay a premium as long as their source of employment and a school zone is near them and meet their standards.
3. Neighborhood Safety
The safety of the community is another important factor when determining the value of a home. Some things you may want to consider include:
- Crime statistics in the immediate and surrounding areas.
- Whether or not there's a neighborhood watch (or a similar service offered by the HOA).
- Street and community lighting.
4. Home Features and Condition
The features, condition, and renovations made also affect the market value of a house. Size is an important element. When pricing your home, realtors will want to assess the number of square feet, including the outdoor space and quality of landscaping. Bedrooms and bathrooms are highly valued. The more bedrooms and bathrooms your home has, the higher its worth will likely be.
The age and condition of the home are significant too. Newer homes are generally appraised at a higher value than older houses. When an older property is newly renovated and furnished, there's a good chance that it will be appraised at a higher value. (Historic homes that have been well maintained can also be incredibly valuable.)
Additional improvements such as new kitchens and add-on rooms can increase the value of your house. Homes with plenty of cabinet space in the kitchen and walk-in closets tend to command higher prices. Many buyers also look for homes that have a lot of natural light since it gives a feeling of space and openness. You may want to consider installing smart devices like video doorbells and thermostats. Some projects like adding a pool or wooden floors could be wise investments.
Just make sure that the upgrades are not too luxurious for the area and are in line with the local buyers' preferences to easily achieve a return on investment.
5. Curb Appeal
Curb appeal is what first attracts — or turns away — prospective buyers. Think of elements like attractive and clean landscaping, a new mailbox, a freshly painted front door, and a power-washed driveway/sidewalk.
6. Local Real Estate Market and Comps
Another factor that will influence the value of a home is the number of properties for sale in that area and what they're listed at. If there’s a high demand in your area and the houses for sale are limited, your home’s value may go up. You can also compare your home’s worth to the other houses in your neighborhood as a good indicator in determining your home’s value.
Additionally, you can refer to comparables, or "comps," reflecting other homes for sale/recently sold in your area. Comps refer to properties that have similar characteristics. To get accurate and information comps, research the recently sold properties in your area that are comparable to your house in terms of features, size, and location. These comps can lead you to a more reasonable value of your home’s worth.
7. Economic Indicators
A strong economy dictates a person’s ability to buy or sell a house. In slower economic conditions, the real estate market can be a struggle. Other economic indicators such as employment rate, inflation, and interest rates can affect the housing market. Fewer people are capable of purchasing a property due to reduced economic activity and a lower value of money.
Mortgage interest rates are also a huge financial factor. A high interest rate may keep some buyers from purchasing a property. You should keep yourself updated with the status of home sales and home price appreciation in your area, especially when you are assessing the best time to sell your house.
By considering these various factors, you’ll be able to assess the overall worth of your house and understand when the best time to invest is. If you’re looking to buy or sell a luxury home in Las Vegas, contact The Brendan King Group today.