Four Proven Factors That Affect Home Value
It is important to understand that property price and home value are two separate things. Property price is the price that the home is transacted at between a home buyer and a home seller. Home value (or property value) is concerned with how much the home is worth in the real estate market after an assessment by valuers.
That being said, there are situations whereby both the home value and property price are the same or similar.
When it comes to the home buyer and the home seller, their views on the actual home value will inevitably differ, as the home buyer is looking to purchase for the lowest price possible, and the home seller wants to make as much money as possible off the home for sale.
That is why a valuation can give both the home seller and home buyer an indication of the parameters within which to work with, so that they can agree upon a property price.
eSolds reveals four proven factors that affect home value.
1. Property location
Location, location, location! A property falls in a certain area, and that very area can simply be worth more than other areas. Selling a condo on the outskirts of the city is different from selling a condo that is right in the middle of the city. That’s why it is important for both home buyers and home sellers to understand that the location of a property plays a vital role in the valuation of that property.
More so for condos and apartments than homes, but the view is actually one of the first things that any potential home buyer will check out when visiting the property for sale for the first time. A home with a great unblocked view will obviously have a higher value than a home that has a blocked view. Nobody has the desire to be able to see the neighbor’s kitchen or washroom (especially if they lack drapes) every time they step outside or go on the balcony. View is the very reason why condos at a higher floor level actually value higher than those at a lower floor level. A condo on a higher floor may be in the same area, but it has a better view, thus a higher property value.
The neighborhood in which a home is situated can have a great impact on home value. Close proximity to schools, malls, highways and such are a vital aspect for potential home buyers and can actually be attractive enough that a buyer is willing to pay a high price for the property. A note here is that planned projects (ie. A new mall, or new place of worship under construction) can also increase home value as well and make a home for sale much more attractive.
4. Nearby Real Estate Transactions
Recent real estate transactions in the neighborhood actually provide comparable prices to better assess a home’s value. If a similar home which is down the street, sold for $500,000, then the home in question being valued, most likely would fall within that range (so long as the home itself is similar).
There are, in actuality, many factors at work, when it comes to home value, but the value of recent transactions in the same neighbourhood can help provide a rough guideline as to how much a home’s value falls under. And of course, the view, location and neighbourhood can provide an argument that can go both ways as well.
There are certainly other factors that come into play in terms of home value, such as amenities, whether the home has a pool, one or two-car garage, and more. One thing is almost always certain though. That the home owner’s thoughts on their home’s value is almost always more than what it is actually worth.