Neighborhood comps, location, home size, age/condition, upgrades/updates, local market “temperature”, interest rates. Zillow. Trulia. Realtor.com. I could go on and on with the list of home search services that will tell you what it “thinks” your home is worth. To determine your home’s value in today’s market, you need to be looking at certain factors that will influence the true value of what your home is worth.
I’m breaking down some of the factors to analyze when trying to figure out what YOUR home is worth:
What may be perfect for you in a home (close to work, near some family members, etc), may not move the needle in home value all that much when it comes to the eyes of an Appraiser.
Those certified appraisal professionals will be looking at 3 primary things: the quality of schools, employment opportunities, and proximity to shopping, entertainment, and recreation.
You may be wondering why a neighborhood on one side of the highway with a nearly identical neighborhood on the other side have two completely different set of prices. The reason may be a result of the above. When it comes to estimating a home’s value, location can be more important than the next topic we’ll discuss: home size.
For the most part, the bigger the home, the more it’ll fetch on the open market. Home values are estimated in price per square foot of LIVABLE space, and $100 per square foot, for example, may be a good deal in some markets, or way more expensive in others.
When it comes to space, the livable space is the most important part that appraisers look at. You could have a 3,000 square foot house with a 1,000 square foot unfinished basement. Your livable space in that example would be 2,000 square feet, and the price would adjust accordingly.
Also, bedrooms and bathrooms are considered very important, so the more of those you have in your home, generally the higher it’s valued.
One of the absolute best indicators of how to determine your home’s value in today’s market is to look at the sale prices of similar homes in your neighborhood or area. These comparables, or “comps”, give the real estate agent or appraiser a good idea of the range of values your home is worth.
However, comps don’t always tell the full story, and adjustments are almost always needed. For example, vaulted ceilings will be worth more than a home without. A killer view will be more valuable than a home that backs up to an industrial yard, all else being equal.
You can do this homework yourself on many of the Zillows and Trulias out there, but to get the MOST accurate idea of your home’s worth, you should contact a realtor to perform a Comparative Market Analysis (CMA) to get the most accurate information.
If you’d like a CMA done on your house, let’s talk! Reach out to me at 717-585-4522 or firstname.lastname@example.org and we’ll talk about your home.
More often than not, newer homes will appraise higher than older homes because the newer components to those homes are less likely to see failure in the short-term, and that generates savings to the buyer. For example, the average cost to install a new roof on a home is roughly $8,000 (according to HomeAdvisor). If it’s a 20 or 30 year roof, a newer home can mean real savings as the buyer won’t have to spend that money as early.
Condition plays into the age role as well, but the two things aren’t necessarily fully dependent on each other. I’ve seen beautiful homes that are over 100 years old and immaculately appointed. Meanwhile, I’ve also seen 5 year old homes that have been completely trashed, and need tens of thousands of dollars of work just to become livable again! If your house is in good shape, you’re on the right track to maximizing the potential value it has.
Let’s face it, the current economy is BOOMING, and interest rates are historically low. I remember hearing stories from my grandparents of purchasing a home with 15% interest rates, and THAT was low.
Nowadays, base interest rates are hovering less than 4%, a spot that they’ve been in for a couple of years. Buyers are taking advantage of these low interest rates while they’re this low, and homeownership is becoming less of a dream and more of a reality for more people.
With more homebuyers flooding the market, homes are being snatched up at a faster pace, and depending on the number of buyers in any market, the price can fluctuate due to supply and demand.
Upgrading/updating parts of your home can have significant impacts on the home’s value, but the full effect is dependent on your location.
For example, more expensive homes benefit to a greater degree when adding a pool or wood floors, but projects like a kitchen re-do or adding an extra bathroom bring a bigger “bang for your buck” for less expensive homes.
It’s impossible to apply the overall monetary benefit of a finished basement in one location over the other, as it really depends on what market you’re in. Which leads me to my next and final point…
Interest rates, home size, upgrades, condition….those are all important factors. But one the most important and final factors to determine your home’s value in today’s market is figuring out how “hot” or “cold” your market is at the time you’d like to sell.
Think of supply and demand. During major storms and the aftermath that follows, gas prices & essentials all spike in price because there are a lot of people looking for those items, with a limited supply of it.
When it comes to selling your home, the same thing applies. The more buyers that are out there on the market (seller’s market) can lead to bidding wars, higher offers, minimal contingencies, and sometimes just a few days until your home goes under contract.
However in a buyer’s market, where there is more supply than demand, home values can fall, buyer demands become more frequent, and days on market can be stretched longer.
The best way to identify what type of market you’re in, and what your home is worth in that market with the local “temperature” involved alongside all the other above factors. As a realtor in Lancaster, PA serving south-central PA, I can tell you that a CMA (Comparative Market Analysis) is the best tool to figuring out your home’s true worth and getting that home on the market at the best price possible given the market conditions.
Identifying all of the above factors can be a daunting task. However, realtors in Lancaster, PA (and surrounding areas/nationwide) are ready to assist in selling your home.
Let’s connect about your home and get that home-selling process underway! Just fill out the form below, e-mail me at matt@mattmoorehomes, or call/text me at 717-585-4522.
I can’t wait to work with you!
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