The Importance of Knowing Your Home’s Worth
Do you ever think about the importance of knowing your home’s worth or what is my home worth? This is the first question asked for those entering the real estate market as sellers. Bottom line is, the price that buyers are willing to pay is what your home is worth. However, there are many factors that go into determining the actual value of your home and what buyers are looking for, i.e., condition and size of the home vs. the rating of the school district or proximity their jobs, updates, maintenance, etc. It is critical that you know the true value of your home, as accurately as you can, for the most successful and expeditious home sale. If priced too high, you could end up with your home on the market for too long which can have several negative repercussions.
When selling your home, it is important to understand what factors influence home value. If you are buying, selling your home, or refinancing, you will have to have a home evaluation done. This will serve as a guide in determining your home’s value. A typical home evaluation considers at factors like location, condition, features and issues or repairs that need to be addressed. A home evaluation helps a buyer or seller to determine a fair price point for either a purchase and or a sale transaction. It also protects the bank, in the event of a foreclosure, that your home is not over or underpriced.
Another key indicator for determining your home’s value, is “what have other homes in my neighborhood recently sold for?” This is also known as “comps.” Through recent sales prices, home appraisals, and comparative market analysis, you can arrive at a pretty realistic idea of your home’s resale value. However, no two comps are the same so adjustments need to be made for key differences, i.e., one house having a brand-new kitchen and another needing a new kitchen.
Key Determinants of Home Value:
Location. Location is very important for home buyers for a variety of reasons but primarily considered for schools, proximity to employment and proximity to necessary amenities such as grocery stores, pharmacies, entertainment, and recreation.
Inventory. Your home might be in excellent condition, with upgrades, and a great location, but the number of other properties on the market, and the number of buyers in that market also have an impact home value. If there’s a small number of buyers competing for a large number of homes, that’s a buyer’s market. Conversely, a market with lots of buyers and not very many available homes is a seller’s market. It’s easier to get your ideal price in a seller’s market, but in a buyer’s market, regardless of upgrades and location, you may need to accept less than you would like.
Age and Condition. Typically, newer homes appraise at higher values because there are fewer issues with plumbing, roof, electrical, appliances, etc. Many buyers are willing to pay top-dollar for move-in-ready homes.
Size. Size and a home’s usable space are also important in determining value. Attics, garages, and unfinished spaces like basements are usually not included in usable square footage. Livable space is what’s most important to appraisers and buyers. Home values are roughly estimated at price per square foot. Divide the sales price by the square footage, i.e., a 2,000sf house selling for $200,000 gives you a price per sf of $100.
Now that you have some ideas of the importance of knowing your home’s worth, contact John M. Brabham Real Estate/Berkshire Hathaway HomeServices a full-service property management firm. We are here to help you sell your home for top dollar. Visit our home evaluation tool to get you started on the road to a successful home sale, or call us at (803) 774-7368 x115.