Why should you estimate your home’s value?
For most homeowners, property is their largest financial asset. So it’s no wonder a home’s value matters, especially if you ever want to sell, refinance or borrow against your home equity.
For instance, if you choose a mortgage refinance option or use your home as a collateral for a secured loan like a home equity line of credit, your mortgage lender will order an appraisal to put a value on your home. It’s a good idea to track your home’s value and know what your home is actually worth.
Factors that influence a home's value
Trying to price a home, whether you’re preparing a house to sell, buying a house or both is an important step. People with experience in the real estate market know that effective home valuations make selling a home as well as buying a home much faster and less stressful.
It’s even easier if you know which factors have the most influence on your home’s value. Here are some of the most important factors to consider when evaluating your home worth:
One of the best indicators of your home value is the recent sale prices of similar homes in your neighborhood. The only problem is that no two houses are exactly the same in terms of features, updates and upgrades, so you’ll need to make some adjustments for key differences, such as new additions or changes to the property.
Your location has a lot to do with your home’s appeal, both qualitatively and quantifiably. For instance, the quality of the school system and employment opportunities in your neighborhood significantly affect your home value. The mortgage rates may differ, too.
Your proximity to highways, markets, utility lines and public transit can also impact your home’s overall value. Needless to say, when it comes to calculating the worth of a house, the location is even more important than its size or condition.
The local housing market influences your home’s value to a large extent. Home prices are based on the principle of supply and demand. That is to say, the number of other properties for sale and the number of buyers in the market can impact your home value.
Let’s explore the two kinds of markets in the real estate business. A seller’s market is when there are a lot of buyers competing for fewer homes while a buyer’s market is one with few buyers but many homes on the market.
In the case of a seller’s market, the seller has an advantage and is much more likely to get a steep price for the property. Who has the edge in a buyer’s market? You guessed it: the buyer.
Most prospective home buyers look at the size of a property first to determine its value. More specifically, the price per square foot. Bigger houses not only sell for higher prices, they also have a higher resale value.
In addition to the total square footage, a home’s usable or livable spaces impact its value. For example, bedrooms and bathrooms are valued the most. The more bedrooms and bathrooms you have in your house, the more it’s worth.
Garages, attics and unfinished basements are not generally counted as usable square footage. Be aware, however, norms are more locally specific so that may not be the case for you. Also keep in mind that neutral layouts are more appealing to home buyers than unusual layouts.
Your home’s age and condition is another really important factor influencing its worth in the market. Newer homes require less maintenance and repair work, so they tend to sell for more than older homes.
Buyers and appraisers will look at a home’s foundation, structural integrity, electrical work, plumbing and fixtures in order to evaluate it.
Your home’s value and the ability to buy or sell it can fluctuate with your local economy. For instance, if the employment rate is low or wage growth is slow, fewer people are able to afford an expensive home, negatively impacting home prices in your area.
While this home value calculator is a valuable, unbiased and reliable tool, it’s not a substitute for an appraisal. Use it as a good starting point for determining your home’s value in today’s market.
It’s best to seek a professional home value assessment. Bring in your real estate agent or an appraiser to physically inspect your house. They will take into account its special features and geographic location as well as local amenities and market conditions.