7 Key Factors That Affect Your Home’s Selling Price
A home’s value can vary based on many factors. Some of these are out of your control, such as interest rates or location, but there are also factors you can influence, like maintaining your property and making renovations that boost value.
A home’s location is one of the most important factors in determining its selling price. Its desirability depends on neighborhood amenities, including schools, crime rates, and accessibility to shopping and dining.
1. Location
A home’s location can significantly affect its value, and is one of the primary reasons behind the real estate catchphrase “location, location, location.” Neighborhood desirability and amenities play an important role in a home’s value, with houses in desirable locations often selling for higher prices.
Proximity to urban centers or employment hubs attract many buyers, while areas with cultural amenities and entertainment options tend to appeal to families. Access to public transportation is also a major selling point, as it can help reduce commute times and increase the overall convenience of a property.
Natural features like scenic views and proximity to bodies of water or green spaces can also have a big impact on home values, especially when they are in high demand. Homebuyers are willing to pay a premium for homes with these characteristics, as they provide unmatched beauty and a sense of serenity.
Other factors that can affect a property’s location include the local economy, interest rates, and real estate market trends. For example, rising interest rates can make it more difficult for homeowners to afford a mortgage, which may lower their home’s value. Meanwhile, an increase in zoning regulations could change the way a property is used and attract new buyers, which could raise its value.
2. Size
The size of a home plays an important role in its value. Larger homes typically have a positive impact on a property’s valuation, which is why they are often compared using the price per square foot method. However, this method can be misleading, as it doesn’t take into account a number of different factors that can affect value.
One such factor is the lot size, which can make a big difference in how much a home is worth. An extra acre of land can boost a home’s value in some locations, while in others it won’t be as appealing. In addition, traffic patterns can also have a major impact on a home’s value. A home on a busy road is likely to be worth less than a similar house on a quiet street.
In terms of the actual livable space, it’s important to note that garages, attics, and unfinished basements aren’t counted in usable square footage. This can lead to a significant discrepancy in the total square footage of a home’s appraisal, which can make it difficult for buyers and appraisers to get an accurate picture of the property’s value. This is why it’s crucial to make sure your home has a clear and concise floor plan when attempting to sell it.
3. Comps
Comps, or comparable sales, are a key tool for real estate buyers, sellers, and agents to determine the value of a home or property. Essentially, they compare a new listing to recently sold properties with similar characteristics such as size, number of bedrooms and bathrooms, and square footage. The best comps are located in the same neighborhood and ideally have the same architectural style. They should also have the same interior features and be as close to your house in terms of layout, as well as the same age, condition, and amenities.
Comp prices tend to be more accurate than market-driven list prices because they reflect what actual buyers were willing to pay in the past. However, it’s important to remember that market conditions can impact a home’s value, so be sure to use comps from the most recent time period possible.
Real estate agents use comps to help clients select a reasonable listing price, while investors and appraisers use them to ensure that they’re getting a good deal or that a property is worth the money being offered for it. However, even when all of the factors above are taken into consideration, a property is ultimately worth what a buyer is willing to pay for it.
4. Finishes
A home’s value is boosted or deflated by the finish work it has, and there are some finishes that can help increase its selling price. For example, matching kitchen appliances can give your house a finished look and a unified style that appeals to buyers. Likewise, replacing older, energy-guzzling appliances with new, energy efficient models can boost a home’s sale price because they will reduce a buyer’s utility bills. Did you know that cleaning companies can be eco-friendly?
Other finishes that will add to a home’s selling price include light fixtures and knobs and pulls, hardwood floors, granite countertops, bathroom finishes and high-tech features. But be careful not to overspend on upgrades. Over-the-top finishes may turn off some buyers, so be sure to choose items that are on trend and will appeal to most homeowners.
Curb appeal is another important element that can make a significant difference in your home’s selling price. Fresh paint, mulch and plants all add up to a nice curbside impression that can impress both potential buyers and appraisers.
5. Renovations
Home renovations can increase your home’s value, especially if done well. However, not all projects yield the same return on investment. Some have a greater impact than others, depending on the type of home you have and its age. For example, if your home is older and in need of a lot of repairs, you’ll get more bang for your buck by making major renovations such as adding bathrooms or bedrooms, converting attics to living spaces and improving the overall curb appeal.
However, you should also be careful not to over-improve your property. Removing too many walls can negatively affect your property’s square footage, a factor that’s important to potential buyers. Similarly, over-improving may raise your home’s price beyond its neighborhood average, which can be a turnoff for buyers.
To help you decide which projects are worth it, the respected trade publication/platform Remodeling annually compares costs of renovation projects and their estimated values at resale. For 2023, they have identified seven projects that offer the highest returns for homeowners – including a smart thermostat and a garage door that can be controlled remotely. Adding these high-tech features to your home can boost its selling price, especially if you’re located in an area where technology is popular with younger generations.
6. Condition
Selling a home involves a lot of moving parts, and the process can be stressful for both buyers and sellers. One of the most important steps in ensuring a successful sale is pricing your home correctly, which requires an understanding of local market trends and property conditions.
In addition to the number of bedrooms and bathrooms, location, square footage, and renovations, the condition of a home also affects its value. A clean and well-maintained property is more appealing to potential buyers and can often sell for a higher price than a dilapidated property.
Many small problems can impact a home’s overall value, such as a crack in the roof that allows water to seep into walls and ceilings over time. In some cases, these issues can cost thousands of dollars to fix and could reduce your home’s selling price.
Several factors affect home prices, including market conditions, supply and demand, and location. By understanding these factors, you can better predict what your property will be worth in the market and make data-driven decisions when it comes to pricing. Working with a professional real estate agent can also help you determine the right price for your property.
7. School Zone
While the old real estate adage was, “location, location, location,” the new adage is, “school zone, school zone, school zone.” Home buyers who prioritize schools in their house-hunt are willing to pay more for homes that are in popular districts.
Good schools draw families, and they also attract renters looking for quality neighborhoods. This can drive up property values in the area, especially when the district is well-ranked.
A study by Redfin found that Americans are willing to pay $50 more per square foot for homes located in top-ranked school districts compared to those in average schools. That’s a substantial bump in price!
In addition, homes in desirable school zones usually have access to amenities like libraries, sports facilities and technology resources. They may even offer extracurricular activities and community gathering spaces for students, parents and the public.
But, if you’re thinking about buying a home in a good school district, make sure you know what you’re getting yourself into. For instance, you’ll have to deal with morning and afternoon traffic from school buses, as well as roaring crowds at weekend football games. Some buyers may be willing to deal with these inconveniences, but it’s important to consider all the pros and cons before you buy.
