There are many different factors that can affect your home’s value. Here are a few things you should know whether you are buying a primary home, an investment home, or if you currently own a home you are wanting to sell.
Supply and demand is one of the fundamental rules of economics that play a vital role on home values. The more homes that are available on the market demands lower home prices where fewer homes on the market demand higher home prices. To know the supply and demand for your area, you will need to know your area’s current absorption rate.
The area or neighborhood in which your home resides will also be a key factor in the amount of money your home can fetch. Certain areas demand more money than others. This is important to know when estimating current or future home values because you can buy or overbuild in a particular area of the city that will get you less of a return than other areas. For example: If all the homes on your neighborhood are 1500 living square feet and you build or buy a home that is 4000 living square feet, then you have over-built for that given area. A good rule of thumb is to build around the same size as the rest of the homes in your area, or acquire a smaller home than the homes in that area. Doing this will keep you in line for getting a more expected and justified sales price.
Upgrades will majorly help out the value of your home. Upgrades can range from giving your home a coat of fresh neutral paint to having a pool built, but there are things you should know when making them. First, just like you can over-build for a particular area, you can also over-upgrade as well. If the homes in the area are selling for a particular price range and common upgrades are linoleum and carpet flooring then installing marble floors with travertine tiled showers would be a bit of an overkill. To get the best return on your investment use a nice ceramic tile with laminate wood floors instead.
Second, use nice neutral tones and light colors if you decide to upgrade your home. Neutral tones and light colors will make the home flow better, feel brighter, and will be more pleasing to the majority of buyers. Remember, not all buyers have your specific taste so if you are making upgrades to sell your home, then make upgrades that please the masses.
The presentation of the home during showings is another key element that is commonly overlooked. Homes should be in pristine condition when there are going to be showings with the home being uncluttered, beds made, house spotless, and smelling fresh. You will get a much higher offer for your home by having the right presentation.
Special features such as being in a gated community will also increase the value of your home. Other features could be having home frontage on a lake, river, golf course, ocean, or fresh and saltwater canals. Obviously, some frontages demand more of a sales price than others but any of these frontages will set your home apart of the majority of other homes (supply and demand).
As a Reminder
I want you to keep in mind that your home must appraise at or above the sale price of the home when the buyer needs financing. If the home does not appraise there are really 3 options. Option 1: The buyer can come to the closing table with the difference of the sales price and the appraisal value. Option 2: The seller can lower the sales price to the appraisal value, or the buyer and seller meet somewhere in between with the buyer pitching in a little more funds and the seller reducing the sales price. Option 3: A cancellation of the contract.
How much is my home worth?
These topics are only the tip of the iceberg when finding a home’s real value. If you would like a professional CMA to know the true value of your home please contact me anytime, or click here to fill out the sellers form. If you are looking for advise on upgrades to get more value in your home to get the best returns please click here. If you are looking for professional advise to get the best deal when buying a home, please click here.