Even if selling is a long way off, it is important to know the factors that reduce or raise your property’s fair market value. Your home’s value is a key factor in determining how much equity you cash out when it’s time to sell. Your equity cash out is a key factor in determining how much house you can buy the next go around. While some factors are outside your control, making sound decisions on the ones you can control helps the chips fall in your favor when it is time to sell. With your financial and future home prospects riding on your property value, here are six things all homeowners should know affect property values. 1. Square Footage. Appraisers and realtors think in terms of price per square foot rather than just the sticker price of a home. You see, not all square feet are created equal. Simply put, while bigger homes usually bring higher sales prices, the price per square foot may often be lower than comparable, smaller homes. Therefore, the value of the extra space diminishes as a home gets bigger. For instance: a kitchen’s more costly materials such as plumbing, electrical, countertops, cabinetry, appliances and tile work make it more costly - and by default more valuable - than a bedroom. A 1,500 square foot home with a 500 square foot kitchen has 33% of the floor plan allocated to expensive kitchen space. This home may cost more per square foot than a 2,500 square foot home with only 20% of the floor plan being allocated to kitchen space. Add square feet to your home’s footprint with the understanding that the additional space doesn’t automatically adjust your home’s value at the same rate. 2. Comparable Homes. Homes recently sold in your surrounding area - and even homes under contract or newly listed - help to identify the fair market value of your home. Finding comparable homes is both an art as well as a science. Homes in a similar location with a similar lot and home size may seem like a perfect comp. But ages of major systems, construction type and finishings play a bigger role in finding your home’s value than most owners realize. The watchful eye of a trusted real estate advisor makes the difference in locating the homes that serve as comparable matches to yours, ensuring you don’t leave money on the table. 3. Neighborhood & Surrounding Development. Is your neighborhood adding amenities? Or is a grocery store slated to open? Maybe a road is expanding and threatens to eat up half your backyard. While these factors are beyond your control, your real estate advisor has the power to track many of these and determine the peak time to sell. Keeping a finger on the pulse of your localized housing market is important to do at least on an annual basis and more often if the time-to-sell timeline is looming for you. 4. Real Estate Appreciation. Historically, residential real estate appreciates 2-4% year-over-year. That’s in keeping with cost-of-living increases. However, in recent years, we have seen historic gains nationally and especially in our Central Virginia area. Our local gains are a factor of incredible interest rates, a bumper crop of relocation and first-time buyers, low inventory and the area being underpriced compared to the national averages. While timing the market is for gamblers only, market indicators like rates, seasonality and inventory trends help predict whether home appreciation gains will stay in keeping with historic averages or exceed them. 5. Home Upgrades. Home improvements typically equate to higher values. However, the return on investment for various improvements is not all equal. Furthermore, the false assumption that owners will recoup 100% of their investment has led many HGTV-inspired homeowners down a money pit. If homes in your area offer buyers “bells and whistles” that are missing from your home, improvements may be on the horizon. But beware! Spending $10,000 to upgrade your bathroom doesn’t mean your home value increases by $10,000. 6. Unique Features. While details like accent walls and lighting can make your home more attractive, if features are too unique, they can turn prospective buyers away. Some buyers love a swimming pool while others walk away because of the maintenance and cost associated with them. Unique features can bring values up or pull them down - seek guidance from a trusted professional before making changes. Never want to miss a post? For more useful real estate tips & tricks, subscribe to our mailing list or contact us with any real estate questions.
Authored by: Kat Medaries, REALTOR® MT Realty Advisors of Long & Foster Real Estate Village of Midlothian Sales, 1100 Jefferson Green Circle, Midlothian, VA 23113 Licensed to sell in the Commonwealth of VA | Equal Housing Opportunity For informational purposes only. Not intended as legal, financial or credit counseling advice. Seek the assistance of a professional should you require.
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