Every home is different. Many factors affect how your home’s value is arrived at: location, age, renovations, etc. Plus, home values vary widely over time – if you are in a seller’s market, your home is worth more; if the market hits rock bottom, your home’s estimated value will reflect that.
If you are thinking maybe now is the time to do some renovations to possibly increase the value of your home in order to sell it, or maybe you are just curious as to why the value of your home doesn’t seem to be increasing as much as others seems to be, here are several variables that might be affecting your home’s resale value.
Location, location, location.
If your home is close to a busy street or highway, has a large vacant lot next to it or a home that has not been kept up very well, not within walking distance to anything…..poor placement has an effect on value. Unfortunately, there’s often not a whole lot you can do about it. This is why two identical homes in the same neighborhood can have very different listing values. If one home is on a cul-de-sac and the other backs up to a four-way intersection, you know which one will sell for more. Conversely, if you’ve sat on a property that has seen infrastructure spring up all around it recently, you could see an increase in market value, particularly if the specs of your home appeal to those looking for a walkable neighborhood.
Age of your home.
Older homes often have a lot of character that many buyers love, such as original wood flooring, beautiful molding, stained glass windows, historic charm, etc. But newer homes are fresh and seldom need renovations. Both are in demand, but a house that is 30 or 40 years old holds a lot less sway over discriminating shoppers, especially if the layout is odd or dated. Renovation is often needed on an older home to update the interior, and is likely to need money put into it sooner than a new construction for things like a furnace, plumbing issues, etc.
If the look of your home reflects what was in vogue a decade or more ago, this may cause current buyers to turn up their noses and walk away. In the early 2000s, dark cabinets and wall-to-wall cabinets were popular. Nowadays, lighter colors and hardwood flooring are popular. This does not mean, however, that you should undertake a major renovation to increase your net return. “I almost always advise sellers to improve their property rather than fully renovate and then price accordingly,” says real estate agent Nicholas Palance. “Fresh paint and flowers spruce up the place for pennies on the dollar.”
Likewise, renovations that are very specific to your taste may not appeal to anyone else, such as renovating your kitchen to include frosted glass cabinets. The risk is that you won’t find anyone else who shares your taste. “Most buyers want to put their own stamp on their new home rather than pay a premium for your renovation,” says Palance. If buyers can’t see past your personal sense of style, your home can sit on the market for months or longer.
Your home’s history
Has anything happened in or near your home recently or in the past? Sad to say, your home’s history can have a negative effect on a buyer’s perception of it. Was your home flooded during a storm at one point and suffered mold as a result? Is or was there a history of crime in your area? Was there a fire on or near the property? You cannot erase details of your home that can be found in public record what sellers try to hide. Savvy buyers do their research, and may not be eager to buy into your home’s history.
Size. Too small….or too big
This is totally the buyer’s decision, so there’s not much you can do about it other than be aware of how your home fits into the square footage questions. Many people are looking to upgrade from a home or apartment that they have outgrown. But does that mean that a 5 bedroom, 4 bath home is ideal? Many buyers are now more pragmatic about how much space is really needed to be comfortable. A McMansion can be hard to sell. Likewise, a tiny home (regardless of its current popularity) doesn’t really work for everyone.
Bedroom or Bathroom shortages
This can be a pretty big deal to buyers. Very few are content with one bathroom for the whole house. Having a private bathroom to themselves, with at least a powder room or ideally a guest bathroom available, is a dream that most buyers share. Even the most desirable address won’t be helped by having only one bathroom or a low bedroom tally.
Out of sync with your neighbors
Is your single-family home surrounded by townhomes? Or do you own a condo in a modern building that is surrounded by historic structure?. If your place lacks comps, guide to comps, a bank is going to have a difficult time assessing its resale possibilities and your appraiser could very easily underestimate its worth low appraisals. An unfair assessment could give your buyer a reason to try to negotiate down the sale price.
No “wow” factor
“Some buildings have an intangible “it” factor,” says Palance. This could mean architectural features, proximity to a well known landmark, nearby celebrity homes. But if your home has nothing that makes it stand out….it’s sometimes difficult to attract attention if you are trying to sell in a busy buying season sellers market. You can try taking your home off the market for a reset, but the listing history remains accessible.
As a seller, there are some things that you can control, and other you can’t. But just being aware of how the factors described above can influence your home’s value may make it easier for you to understand why your home is valued the way it is.