Like any commodity, a home’s value depends on how willing buyers are to pay a certain amount for it. So, what are those factors that drive this willingness and consequently determine home value? Let’s try to find out.
The location of a home is a pretty subjective factor. A house could be ideal condition for one family and a big-no for the other just because of where it is located. The proximity to the places you frequent, like your workplace, your kids’ school and, your parents’ house, is a factor that makes the location of any home make it more desirable to a buyer, and this desirability could vary with every buyer.
Nonetheless, seasoned real estate appraisers have developed a matrix to define the location of a property for its value. Appraisers usually factor in these four elements to decide how good the location of a house is.
- Quality and quantity (number) of educational facilities
- Availability of urban facilities (malls, recreational spots, etc.)
- Employment landscape
- Proximity to transport infrastructure (highways, mass transit, etc.)
Comparables or Comps is real estate jargon used to indicate properties/homes that are “comparable” to the house being appraised. For instance, a 4,000 sq. ft. house in Beverly Hills will be compared to recently sold houses of the same size and features within the city. However, Beverly Hills is a unique example. It is a city of just over 30,000 people with luxury real estate overall.
In big cities and metropolitans with several socioeconomic layers, these comparables often get down to individual neighborhoods and streets. No matter how a home is being evaluated and appraised, its comparables will always factor a lot in its final appraisal.
3) Square Footage and Usable Space
The square footage of a house is usually directly proportional to its value. However, one variable is also part of this equation, i.e., usable/livable space. Livable space is all that part of the house that is fully constructed and ready to use. Garages, unfinished basements, and attics are often not included in livable space.
4) Age and Current Condition
The age of the house affects its value. There is no doubt about that. However, if a home is kept updated, renovated, and boasts a good condition, it can fetch a value above the average. Usually, newer installations of plumbing, electrics, and roofing give a boost to the value of an old property. For instance, a house with roofing shingles that have gone past their operating life can’t have a better appraisal than a home of similar construction and age but with a roof that still has some years of warranty left.
5) Economic Conditions
Real estate market banks a lot on the purchasing power of buyers. Slow economic growth, job saturation, and inflation, all these factors can affect the entire real estate landscape that also affects the value of a single house. Since such value degradation happens across the board, homeowners don’t need to worry about it. Professional real estate appraisers are expecting such a value slump following this pandemic wave.
If you are already overwhelmed with the idea of buying or selling a home, then use our services to make things easier. My Local Home Appraiser makes sure you can have your home value evaluated by the most seasoned real estate appraisers on the block. Visit the My Local Home Appraiser website for more details.