The value of a property is dependent on a variety of factors. As a homeowner, it is important to understand what these factors are so that you can make informed decisions that may help maximise your property’s value over time.
One of the main factors that affects a property’s value is its location. Properties located in desirable areas near amenities like good schools, parks, transportation, shopping centres and entertainment tend to have higher values. Crime rates and noise pollution in the area also impact how much buyers are willing to pay.
Proximity to the city centre, highway access and natural features like lakes or oceans also play a role. A property located far from the hustle and bustle may be less desirable and this can be reflected in its lower value.
The physical characteristics of the home itself also determine its market value. Factors like square footage, number of bedrooms/bathrooms, layout, age, condition all come into play.
Additional features like a garage, basement, pool, view, landscaping etc. can increase property value as buyers look for homes with amenities that meet their needs. Upgrades and renovations to kitchens, flooring, bathrooms also boost value.
The current state of the real estate market has a direct correlation with property values. When the market is hot and demand is high, property values tend to be inflated. During cooler markets with lower demand, prices tend to be depressed.
Interest rates, foreclosure rates and unemployment levels are some economic factors that influence the market and therefore impact values. When interest rates are low, buyers have increased purchasing power which drives up prices.
Appraisers look at recent sales of comparable properties in the area when estimating a property’s value. If nearby homes have recently sold for higher prices, your property value is also likely to be high.
Comparable sales, also known as “comps” provide concrete data points for coming up with an accurate valuation.
A well-maintained home with manicured landscaping and a freshly-painted exterior will garner higher prices than one in disrepair. Upkeep and renovations show a pride of ownership that buyers find appealing.
Neglected maintenance issues like leaky roofs, old wiring, cracked walls, dysfunctional HVAC systems etc. can decrease a property’s value significantly.
Understanding how each of these factors impact your home’s value empowers you to make smart decisions that can help maximise your investment over time. Proper maintenance and upgrades in a desirable location will garner the highest price when it comes time to sell.