A home’s worth influences many facets of ownership like sales price, tax burden, and investment value, so determining an accurate value for a home is essential before engaging in major projects like refinancing the mortgage or selling the residence. A certified real estate professional may be able to assist with this process; however, there are some investigations a homeowner may complete on his own to determine the overall value of the property.
The final value of a home is based upon several direct and indirect factors that may include characteristics like location, amenities, and the current state of the economy. Additionally, the average price of comparable properties may also influence the final value of the home. It’s essential to understand that the value of a home may be based upon many concrete factors, yet different people may place a different price on the home.
There are several factors a professional appraiser might consider when placing a value on the home, and a future homeowner looking to put a bid on a property can use these same characteristics to figure out a home’s appraisal value.
Physical Details and Features of the Home
An appraisal report will often consider the following features:
- Size as well as layout including an attached or detached garage
- Number of bedrooms and bathrooms
- Structural issues that may require repair now or in the future
- Age of the home as well as appliances, fixtures, and heating/cooling devices
- Status of home improvements made as well as materials used for those upgrades
- Condition of the interior elements like carpeting, tiles, and cabinet/door hardware
- Square feet of the lot and placement of the home upon the lot
Environmental Factors Also Count
In addition to the amenities within the home, consider these environmental factors when adding or subtracting value:
City: A city or town with an upward economic trend boosts home values. Low vacancy levels in the business district create demand for housing and increase sale prices.
Features: City-run and maintained amenities like libraries, public parks, and swimming pools improve daily life for residents as well as home values.
Neighborhood: It should be obvious that a home positioned amongst nicely kept properties will have a better value than a home that sits between residences with exteriors that need painting and have overgrown landscaping.
School: A district with a good reputation is commonly found near homes with impressive property values.
Transportation: A home that’s close to major sources of transportation like train stations, freeways, and public transportation like buses offers a boost to home value due to the ease of commuting.
Appraisal Value and Mortgages
Although a future home buyer might want to see a home appraised at a low amount to make it affordable, there is a problem with this strategy since the seller doesn’t have to offer the home for the appraised value.
For example, if an official appraisal determines a home is worth $200,000, and the seller wants to offer it for $250,000, it’s unlikely that the bank would offer a mortgage to the buyer above the appraised price. A low appraisal usually doesn’t benefit anyone in the buying and selling process, so it’s best to ensure the home is presented in the very best light possible.