Factors that Affect Home Market Value

Home Market Value pic

Home Market Value
Image: investopedia.com

A personal trainer by experience, Alex Garbiso is also pursuing an interest in real estate. Alex Garbiso hopes to enter this industry in the near future.

A key concept in real estate is the determination of a home’s value. It involves a complex network of factors, some of which relate to the home itself while others depend on the surrounding market. For example, if sale prices in a neighborhood have recently risen or the neighborhood is walkable to grocery stores and other amenities, a home in that area might bring more than a similar property in another community.

Another key factor in home value determination is overall home size. Homes that are comparable in price tend to be within 20 percent of one another’s square footage, particularly if they have the same number of bedrooms and bathrooms.

Bedroom and bathroom numbers tend to be more accurate in predicting sale price than pure square footage. A third bedroom tends to add value over a similarly sized home that has two bedrooms, provided bedrooms are of similar size, but a fourth or fifth bedroom does not tend to have the same effect. The same is true for bathrooms, the second of which adds value though the third has little impact.

Those who are comparing properties should ensure that the homes compared are in the same neighborhood and have a similar layout. An open layout suggests a higher value, as does a home that is in good repair and has up-to-date features. The exception is the home that has significantly more luxury features than other properties in the same neighborhood, as the average neighborhood value may override the value of the upgrades.