Median home sale prices have been increasing for the past few years now and they reached another all-time high. It is evident that much of this has been due to a simple equation of low supply with greater demand. However, what effects are there on a micro level within a specific real estate market? What factors drive the price of a particular home in a particular location?
An appraiser informs that pricing is based on three factors: location, product and timing. Product and location are in large part connected where it can be a great home in the great neighborhood. Timing is more of a sliding variable that can have to do with what the local competing inventory is at that given time.
How Appraisers Determine Value
Appraisers will approach the value of a home starting with a physical inspection of the home’s structural elements. This includes items such as roof, HVAC system, bathrooms, kitchen and the general conditio. The appraiser will then factor in location and neighborhood which will include researching the comps and adjusting the price based on comparing your home to those.
Home Features Currently in demand
These items can have a significant impact on the price. Granite counters used to be a highly sought after item, but today they are considered standard. Design trends are indicating that interior colors have switched from beige and brown to more of shades of gray. These trends along with other preferences can vary regionally including having a pool or a second story which may or may not add value.
How a Seller can add Value
One aspect that is universal is to have your home in excellent condition when listing it on the real estate market for sale. If you have been deferring some repairs or improvements then taking care of them beforehand is always best. Buyers often pass on a home if there are obvious signs of disrepair. Additionally, these more significant repairs will certainly be found in a home inspection anyway. Finally, be sure that your home’s exterior is looking outstanding. Your home’s curb appeal is very important being the first and last thing that every buyer will see.
Traps to Avoid
In markets like the current one, there can be multiple offers and bidding wars. When this happens, the purchase becomes more emotional than practical. Don’t lose sight of the property’s true market value and replace it with your own. Additionally, if you are planning on securing a loan then your home will need to appraise accordingly otherwise the deal will fall through.