There have been countless articles, interviews, news segments, and specials devoted to the current housing crisis. Foreclosures have, sadly, become a very real and almost daily occurrence in many cities. Prices fluctuate wildly, and property taxes are leaving some homeowners out in the cold. For people trying to sell their homes in the current housing landscape, deciding how to price their property can feel like walking a tightrope. Multiple factors affect property value, and without a clear understanding of them, a homeowner can find themselves in possession of a home that has lost value, or unable to sell their property because the value is too high.
Real estate agents can often give a basic idea of property value. However, their job is to sell the home, so be wary of the numbers they toss out. It is best to go through a dedicated appraiser to determine the property value. Their only job is to look at the home, its history, and the surrounding area, in order to generate a realistic price for your property.
Appraisers take the following factors into account:
They will look at the value of other properties in your area. Though there may be some disparities, for the most part, a concrete baseline can be reached, based upon the prices set for comparable properties in your area. This is especially helpful if more than one home in your immediate neighborhood is for sale. Your home needs to remain competitive, so it is vital to know the price of the competition, as it were.
The home and grounds, themselves, have a large influence on the property value. When most homeowners think about property values, it is this portion of the determination scheme upon which they focus. The number of square feet or meters that make up the house, the size and condition of the lot the house is on, the number and location of bathrooms, and the number and type of repairs performed on the house, all affect the property value.
If the home is old, and has been remodeled or retrofitted, this can also vastly affect the value. Working with an appraiser prior to beginning remodeling jobs on old homes can help you determine which light fixtures, moulding, etc. to keep, and which parts of the house should be overhauled. Improvements that include “green”, or energy saving appliances or materials, will often increase a property value more than a simple fresh coat of paint.
The location of the home, in both the town, and on the lot, affects the property value. If the home is in a high-demand area, where housing is limited but the economy and resources are booming, the home will be valued higher than a similar property in a more “sleepy” community. A home that is near a school, a city center, a park, or public transit, will fetch a higher price. The abilities to easily commute to work, enjoy nightlife, and walk your children to school, are all highly prized assets.
Conversely, buildings that share the lot with your home, like sheds or garages, will lower the property value if they are in poor condition. Repairs or remodeling jobs that are performed on the house that do not suit the neighborhood, or destroy the original charm of an old home, will also devalue the property. Keeping the grounds neat is helpful in creating an overall sense of attractiveness, but don’t go overboard. The grounds can change too rapidly, based on factors outside of the homeowner’s control, so most appraisers give the appearance of the grounds less weight than the house itself.
Though determining property values is not an exact science by any means, the categories above will hopefully give you some idea of how the value of your home is determined. If you are looking to buy a property, keep these factors in mind as well, especially if you are considering buying an old home and fixing it up. Before you empty your online bank accounts, or despair of ever selling your property, get an independent second opinion, and take a good hard look at what factors are affecting the price of your home.