Although most of us think that the value of our property can be determined by how much our neighbor's property sold for, this is usually not the case. True, your neighbor's sale price does affect your own property's value, but it does not determine the final value. Even considering all the improvements, all the third party opinions including those of an appraiser, what really matters is what the potential buyer is willing to pay for it. However if you want an immediate, hands-off analysis of your property, hiring an independent appraiser to provide you with an appraisal and an objective value would be the path to take.
This article was written to explain the factors affecting real etate values and how those influences work. In the case that you do not have the time to read the more detailed explanations of the factors affecting your property's value, you can skip to our summary section to get an overview. The factors in this article include most everything from indirect influences, such as economic factors and employment trends to direct influences, such as home improvements and remodels. The one thing to remember when reading all of these factors is again, that the value of a property is only as high or as low as a potential buyer will be willing to offer for it.
To begin, one of the most important factors affecting your property's value ad the value of all properties in the market is the principle of supply and demand. The strength or lack thereof of the real estate market is largely dependent on this concept. This principle is based on the balance between the for sale inventory on the market and the demand for real estate from potential buyers. When there is low supply and high demand, the real estate market is strong; as a result, the value of your property will rise. When there is high supply and low demand, the real estate market is weak; as a result, the value of your property will fall. Although this is a very broad principle that applies everywhere, it is not localized enough to determine the final value of your property. Remember, real estate is a very local industry. The real estate market could be crashing in Las Vegas but it could be thriving in San Francisco.
By taking into consideration the growing surge and support of green practices and lifestyles, it is understandable why the ease of transportation is beginning to affect a property's value more and more. In the past, the ease of transportation was directed more towards the proximity a property was to a freeway or to major recreational areas. However, now the ease of transportation is increasingly referring to the proximity to public transportation and carpooling locales.
This is often an overlooked factor but this is actually one of the leading factors behind the strength of the real estate market--the strength of the employment sector. If a region's employment rate is unstable and there is no job growth, there is no reason for homebuyers to consider that area when buying a home. If there is no job to attend, there is no money to pay for the house, so why buy the house? The stronger the employment market is the higher the property value will be compared to markets where unemployment statistics are on the rise.
Education has long been an important and leading reason behind families and couples moving into more expensive neighborhoods. It has long been known that the value of homes in a top tier school region will never depreciate much. The reason being that there are a limited number of good public schools. With the restrictions on who can attend what school becoming stricter with every passing year, it is becoming more and more desired to buy a home in a good school district. Families with children also oftentimes have two incomes, which allows for them to afford more home, making these more expensive homes just within their reach.
Safety is a primary concern for everyone. Nobody wants to live in a neighborhood where their children or where even they will be in harm's way. The safer the neighborhood, the higher the offers will be from potential buyers. A seller can transform a home into a luxury custom-buitl house in a marginal area and still not be able to ask for the selling price he so desires, due to the unsafe living environment.
The condition of the property is one of the most influential factors of a property's value just because generally potential buyers see the property from a cosmetic perspective--can I see myself living in this house? Does it look clean? Does it look nice? Will I have to put any additional work into it? When a property is well cared for and has substantial curb appeal, it is much easier to ask for a higher selling price than if the property were dilapidated and in need of some repair. So before you sell your home make sure to pay attention to all the little details and get the broken doorknob fixed, the creaky cabinet door oiled, and the peeling cabinet door repainted. If you would like some more tips on what to do to improve your propert's aesthetic appeal read our article: "Selling a House in a Tough Seller's Market."
The amount of improvements you have put into your property also makes a difference when it comes to how much you can command when you sell this significant asset. Any aesthetic or functional improvement, especially in tracts where there are many models of the same home, can easily put your property above the rest. These improvements can include, but are not limited to: room additions, flooring upgrades, kitchen upgrades, window additions, pool additions, professional landscaping. Do keep in mind though to not go overboard. There are times when putting too many unnecessary improvements in the property will not get you a significant or even sufficient return on your investment.
This factor can be completely up to you or it can be completely out of your hands--your motivation behind selling the property. If you or any seller for that matter needs to sell the property as soon as possible, whether it is due to default payments or medical emergencies, you will be more apt to take a lower offer just to get the property off your hands. Due to the fact that you are willing to consider lower offers, your property's value immediately falls just because the selling price is only as high or low as potential buyers will offer. So in order to keep your property's value high try to sell the property during a time when you are not pressured to get it off your hands. If in the case you are attempting to buy a larger home, plan accordingly and try to time it right so that you can buy your property without having to be burdened with two separate mortgages.
In summary, the following is a list of all the factors affecting your property's value (click on the factor if you would like to read a more detailed explanation and the reason behind its influence):
