May 30, 2019 by
Whether you are buying or selling a home, there is probably one big question on your mind: How much is it? Buyers want to find a house they love and can comfortably afford. Sellers want to receive top dollar, to set them up for success on their next journey. No matter which side you are on in the real estate equation, it is important to understand the factors that help determine how much your home is worth.
There is a lot more to the value of a home than simply its square footage. While a larger footprint typically means a higher price, there are many other factors at play. And although online calculators are estimating a home’s value with increasing accuracy, a real estate agent can provide much more detailed information about comparable sales in your area. This includes the effect of features in those homes on their sale price, and additional credits that were negotiated. Online calculators take some (but not all!) of that information into account.
Take a look at the types of home value and the top eight factors that can influence a home’s list price.
Three Types of Home Value
A home’s value can fall into one of three different buckets, including:
When a home is Under Contract, buyers who are financing the purchase through a mortgage lender will be required to have an appraisal performed by a licensed appraiser. This professional bases their evaluation on several factors related to the sale of the home to help “justify” the loan amount to the lender. Many assume that their home’s Appraised Value is the true value of the property. However, this figure is mostly relevant to the lender and the entity that ultimately purchases the home’s loan.
A home’s owners will pay annual property taxes based on the home’s Assessed Value. This number is based on limited information and is determined by a property assessor for tax purposes only. The assessor will use an algorithm to aid in the process, which produces values that are usually low. Because of this, the results are also somewhat unreliable. When mistakes drive a home’s Assessed Value and property taxes excessively high, it may be beneficial for the owners to contest the assessment.
True Market Value
Also referred to as Fair Market Value, this figure is best defined as the amount a purchaser is willing to pay for a property. A real estate agent will help establish a home’s True Market Value when it is being listed for sale by looking at very detailed information about the home, as well as local market conditions. This figure will then be reflected in the home’s list price.
There’s no reason not to look into the True Market Value of your home, even if you are months away from listing it for sale. Meyer Real Estate offers a Free Market Analysis to homeowners in the greater St. Charles area. This no-obligation consultation will help sellers know what to expect and how to prepare their home to sell at a competitive price.
8 Factors that Can Influence the Value of Your Home
A realtor will help you decide on a listing price for your home during a complimentary pre-listing consultation. In setting this price, the major factors they will reference are:
Location is just about the only part of a home you cannot change. At the end of the day, sale prices of comparable homes in your area (referred to as “comps”) are perhaps the single biggest factor that will influence a home’s value. Sale prices will also be higher in areas with low crime rates and good public school districts. These neighborhoods might have an inherently higher value in the first place – such as Ladue-Frontenac in St. Louis County. In evaluating a home’s location, buyers also consider accessibility and proximity to local amenities, such as parks, restaurants and grocery stores.
2. Floor Plan and Layout
Beyond square footage, the number of bedrooms and bathrooms in a home is also an important starting point. The value of a home may be positively or negatively impacted by the arrangement of those living spaces, such as:
- A floor without a bathroom (–)
- A home without a true master bedroom and/or bathroom (–)
- A basement (+), finished basement (++), or a slab or crawl space (–)
- Laundry facilities located on the main level (+), or in the basement or garage (–)
- Niche additions, such as an indoor terrarium or garage “man cave” (+/–)
Some floor plans are more popular than others. As Baby Boomers reach retirement age, ranch homes are in increasingly higher demand than multi-level and two-story homes. Of course, higher demand translates into greater value.
House hunters are typically interested in a few important ages, including:
- The age of your home
- The age of your roof
- The age of your home’s components, such as the HVAC
The age of a home is mostly a matter of buyer preference. However, most insurers will not cover a roof that is more than 20 years old because they are “too risky.” And of course, older components are somewhat of a ticking time bomb, as they will eventually need to be replaced.
None of this means well-loved and lived-in homes cannot sell and sell quickly – they just need to be priced correctly. Buyers will need to be able to afford their mortgage payments on a home that needs significant repairs.
4. Curb Appeal
“Curb appeal” is a broad term referring to the factors that make up your home’s first impression. This could include the home’s architectural style, landscaping, size and quality of the yard, and the overall conditions of the area or neighborhood. While some of these factors may not be in the homeowner’s control (i.e., the “car buff” next door who always has their truck on blocks in the driveway . . .) a clean and well-maintained exterior will always make a positive impact.
5. Upgrades and Finishes
To fetch top dollar for their home, sellers often tackle upgrades they have had in the back of their mind for quite some time: replacing worn out carpet, updating the builder-grade light fixtures, or touching up paint throughout the house.
If you’ve held off on these updates until preparing your home for sale, an experienced real estate agent can advise you on the renovations that are most likely to give you a return on your investment. As a general guideline, kitchen and bathroom updates are almost always considered “big ticket” items, along with flooring and countertops. If your reno budget is not huge, we cannot say enough about the benefits of a fresh coat of neutral-colored paint – especially when applied by a professional!
Psst! Are you ready and willing to take on the renovation project that will help your home sell for the best price? Buyers with high equity in their home can get a temporary loan through Meyer Real Estate’s Repair to Sell program.
A Pre-Listing Inspection will give you an opportunity to head off the imperfections and potential housing code violations that will come up when your house is Under Contract. Of course, the Seller’s Disclosure will also include statements about any previous issues, such as water damage, mold, radon and pests. As we said in Point #3 above: Homes with a “history” can sell when they are priced appropriately.
7. Lifestyle Factors
There are lots of little things that can affect a person’s lifestyle or quality of life. While the presence of one or two of these conditions may not have a huge impact on a home’s list price, they could be considered “less than ideal” for certain buyers. This includes:
- Availability of parking – whether as street parking or a one-car or two-car garage
- Whether or not pets have lived in the home
- Whether or not the home has been owned by a smoker
- The home’s proximity to amenities, busy streets, train tracks and/or an airport
- Zoning and construction going on in the area
- The appearance of “bad” or careless neighbors (or the homeowner themselves!)
- Crime ratings
- Flooding problems
8. Market Conditions
Last but not least, a home’s value depends on conditions of the local real estate market. Homes can be priced higher in a Seller’s Market, where supply is low but demand is high. The reverse is true in a Buyer’s Market, where supply is high and demand is low. Demand can also be influenced by available interest rates on mortgages. When interest rates are low, more buyers are able to afford a mortgage payment.
Sell Your Home for the Right Price with Meyer Real Estate
Meyer Real Estate has been helping home buyers and sellers accomplish their financial goals since 1959. Whether you are ready to sell your home now, or just considering the idea, the agents at Meyer Real Estate are pleased to offer a Free Market Analysis to all homeowners in the greater St. Charles area. This analysis will provide you a blueprint to prepare your house to be sold for the right price at the right time – with no obligations or strings attached.