Establishing a home’s value can be a complex, multifaceted process. Without being a real estate professional, it can be confusing to know what exactly will drive the cost of your home up or down. Here are four major factors that influence your home’s value.
1 – Location
Where a home is physically located will have a large bearing on what it is worth. Is it in a safe neighborhood with convenient access to highways, shopping and schools? What are the demographics of the area and the age and income of the residents? Is there ready access to police and other emergency services? Is it located on a busy street or are there trains rolling by all of the time? Neighborhoods vary significantly even when right next to one another, and there are many elements to take into account for appraisers.
2 – Age and Condition
A home that has reached historical status or a new home will be worth more than anything in-between. The upkeep of the home is taken into account as well; was the house lovingly cared for or has it been left in disarray? Likewise, the home should be on par or better than those around it. It should also not stick out per se; a house painted a wild color surrounded by more subdued homes will not fetch a good price.
3 – Upgrades
Just as the condition of the home will factor into the market value, so will any updates and additions. Does the home feature newer appliances and fixtures or does it look like something out of the 70s? Maintaining a home is not enough; keeping it up to date will go a long way in impressing appraisers and buyers alike. Kitchen and bathroom updates, as well as upgraded windows and doors, will all have an excellent return on investment when it comes time to sell.
4 – Market
The housing bubble and resulting burst left many areas with a major increase in foreclosures. This results in properties not being well-kept, crime rates going up and the overall market value of the homes going down. When the economy is down, so are home values. Housing costs rise and fall, and it is always better to wait to sell on an upswing, or at the very least, when the market levels out.
Many more factors will go into the final determination of a home’s worth. However, going over these four major points and checking on recent sales of comparable houses in the neighborhood is a great starting point.
Roman Temkin is a real estate developer from NYC.