Whether you’re buying or selling, the market value of a home is a top concern. As a buyer, you want to find a house that’s not only a great place to raise your family, but also a good investment. And, as a seller, you want to sell your current house for top dollar so you can maximize your profit on the transaction. But what determines the market value of a home? Here’s a closer look at the factors you should know, along with tips regarding market value for both buyers and sellers.
Factors affecting the market value of a home
1) Location, Location, Location!
One main factor that determines a home’s value is its location. So much so, we say it three times! Houses that are near cities tend to be worth more than ones in rural areas. Your house will also be seen as more desirable if it’s close to a beautiful view, shops, restaurants, good schools, or a major highway.
2) Home Features and Condition
The home itself will also impact market value. Bigger homes with more bedrooms, bathrooms, and usable living spaces command higher prices.
The age and condition of the home are important too. New homes generally appraise and sell for more than older homes because they’re in better condition and require fewer repairs. But if an older house has recently been renovated, it may sell for just as much as a newer home.
Improvements like new kitchens and finished basements can also increase the market value of a home. But if the upgrades are too luxurious for the area or aren’t in line with what local buyers want, then you may not see a return on your investment.
3) Supply and Demand
The local real estate market has an impact on home prices as well. If there’s a high demand for homes in your area and not enough supply, your home’s value may go up, and vice versa. What similar houses in your area are currently selling for is a good indicator of how much your home is worth.
Buyers: How to choose a home that will retain its value
Your home is your biggest asset, so you want to make sure that it will hold its value over time. Here are features to look for in your new home that may make it easier to sell in the future.
- Location. If you buy a home that’s close to downtown or in a good school district, it will sell for more down the line.
- Multiple beds and baths. Buyers prefer homes that are big enough for a growing family and have at least two bedrooms and two bathrooms.
- Ample storage space. Houses with plenty of cabinet space in the kitchen and walk-in closets in the bedrooms tend to command higher prices.
- Open floor plan. Many buyers look for homes that feel open and have lots of natural light.
- Multi-car garage. Having an attached, multi-car garage will increase the resale value of your home, especially if you live in a cold climate.
- Age. Newer houses usually fetch higher prices, so you may want to consider the age of homes as you’re shopping around.
- Homeowners associations. Houses in neighborhoods with HOAs sell for an average of 4% more.
Sellers: How to raise the market value of a home
Some of the factors affecting the market value of a home are things you can’t change, like the location and age. But if you want to sell your home for top dollar, there are still a few things you can do to increase its value and make it more attractive to buyers.
- Upgrade aging home systems. Buyers are looking for houses that are low maintenance and won’t require a lot of repairs. Replacing aging home systems like the roof and water heater may make your home easier to sell.
- Update the kitchen. The kitchen can make or break a home sale, so it’s worth renovating. Even inexpensive updates like refacing the cabinets and replacing outdated hardware earn sellers an average return of approximately 80.5%.
- Finish your basement. Remodeling your basement will add extra usable space to your home and increase its value without costing as much as an addition.
- Install smart tech. Sixty-five percent of buyers are willing to spend more on a house that has smart devices like video doorbells and thermostats.
With these tips in mind, you’ll be able to increase the market value of your home even if it isn’t brand new or in a prime location.
How to calculate a home’s value
At this point, you may be wondering how a home’s value is actually calculated. There are several home value estimators online that will share a suggested value within minutes. The “Zestimate” calculator by Zillow is a well-known and widely used choice.
However, it’s important to remember that these online estimates are not always 100% accurate. An online house value calculator is only as accurate as the data that is has stored to use to calculate your estimate. For instance, if you recently added new floors or completed a kitchen remodel, Zillow may not account for those improvements in the final estimate. That’s why we recommend that you work closely with an experienced real estate agent that can evaluate all contributing factors to arrive at the best home value estimate.
How would my real estate agent estimate the value of my house?
When you work with a real estate agent, they will run what is referred to as a “Competitive Market Analysis” (CMA). This report provides an in-depth analysis of a home in comparison to homes in the neighborhood that were sold in a similar condition and price point. Building a CMA requires a great deal of research and data collection of the most up-to-date information about the property in question and the homes used for comparison (also known as “comps”). That’s why it helps to have a well-trained, experienced eye to research, evaluate, and calculate the best possible home estimate.
In addition to the support of your real estate agent, a home appraisal will be required to finance the home. Before a purchase or sale of a home is complete, an appraiser will assess the value of the home and provide a detailed report on their findings. Your loan officer will use the report to show that the home is valued at a fair price.
An appraisal protects the buyer and the lender. The buyer will have the peace of mind of knowing that they paid a fair price for their home, and if the buyer were to default on their mortgage, the home could be cold to recoup the funds needed to cover the loan amount.
Expert support for your home sale or purchase
If you are planning to buy or sell, we can connect you with a trusted real estate partner and appraiser that will help you accurately assess the market value of a home. And as always, our team here at OVM will be standing by to answer any questions you have and help guide you through the mortgage process. Give us a call or start your online application today.