The value of your home is determined by many factors including the location, square footage, condition, property amenities, real estate market conditions as well as similar home sales in your neighborhood, which are also referred to as comparables.
Factors that Determine the Value of Your Property
In general, homes located in more sought after areas such as communities with a good school system, access to public transportation, newer park and recreation facilities and compelling commercial districts are valued more highly than other properties.
Larger homes are also usually valued more highly because property values are usually calculated on a price per square foot basis. This is why property owners and real estate agents focus so much on square footage.
The condition of the property is another important input as homes with newer infrastructure such as the foundation, roof, HVAC, plumbing and electrical are typically worth more. Additionally, properties that utilize higher quality building materials tend to command higher prices. If you have recently remodeled your home, especially if you upgraded the kitchen, you should also benefit from a higher property value.
On the other hand, properties that require significant renovations are valued lower because prospective home buyers deduct the estimated cost of these repairs from the property value.
It is important to highlight that the condition of the property may be different than the curb appeal. A home may look great on the exterior but may require extensive upgrades or structural improvements when you actually move past the front door and inspect the property.
Property amenities also contribute to how much your home is worth. Homes with more expensive finishings and fixtures such as hardwood floors, state of the art appliances or a high end audio system are valued more highly. Additionally, extra features such as landscaping, swimming pools, decks, a captivating view or multiple car garage can boost a property’s value.
Real estate market conditions as well as recent home sales also influence how much your home is worth. You may have a terrific home but if other properties in your area sell for relatively low prices then those transactions may decrease the value of your property.
Additionally, if the real estate market is down and relatively few people are looking to buy homes, that reduces the market value of your home. On the flip side, if the market is hot and more people are looking to buy than there are homes available, that supply-demand imbalance can cause your property value to increase.
So there are multiple factors both within and outside of your control that affect the value of your home.
So How Do I Find Out How Much My Home is Really Worth?
The best way to determine an accurate value for your property is to obtain an appraisal report from a qualified appraiser. An appraiser performs a comprehensive inspection and review of your property that takes into account all of the factors outlined above. The appraiser also reviews comparable home sales in your neighborhood to capture current real estate market conditions and property values.
The appraiser analyzes all of this information and provides an estimated fair market value for your property. This is the same appraisal report and property value that lenders use when you apply for a mortgage, which highlights its importance and credibility.
An appraisal report typically costs $450 - $700 depending on the size and estimated value of your home. It usually takes one-to-two weeks to perform the appraisal and provide the report, depending on market conditions and other factors.
Review What is an Appraisal Report?
You can also review the estimated value of your property value on real estate websites but these values are not the same as an appraisal. The estimates provided by these sites are based on property tax records and recent property sales in your neighborhood. The quality and accuracy of the estimates varies but if you are looking for an approximate value for a property, these sites are a good place to start.
While real estate websites offer useful information, the estimated property values provided by these sites may not reflect key attributes of your home including recent upgrades or amenities that may not be easily apparent. Additionally, if your property has structural issues or requires renovations, these sites may inflate the value of your home.
In conclusion, real estate websites are a good starting point to understand what your home is worth but if you want to most accurate, in-depth assessment of your property’s value then obtain an appraisal report.
"Appraisal Review Reminders." Freddie Mac Learning. Freddie Mac, November 2019. Web.