Whether you are considering selling or buying a house it is important to know what factors go into determining a property’s market value. Homeowners love to see their property appreciate in value, and whether selling or not, it is wise for them to take into account how they can affect this. Buyers in the meantime need to know which factors to check when considering purchasing a property, to make sure that it is valued correctly. While values are influenced by the ebb and flow of the real estate market, they are also partially determined by the factors we consider below.
Size and Usable Space
The price of most residential properties, whether a single family house or multiple occupation unit, is calculated by square foot. That is, if a 2,000 square foot home is sold for $200,000.00 then its price per square foot is $150.00. This price per square foot fluctuates according to market conditions and certain aspects of the property. Depending on the conditions referenced below, a price of $150.00 per square foot may be a great deal or a complete ripoff.
One thing to consider is that price per square foot only applies to what is called usable space. This usable space is the area of the property that is livable and does not include features such as garages, unfinished attics, or unfinished porches/other exterior areas. While a garage may add value to a house, its square footage will not be included in the calculation of the price. In other words, the garage as a feature may raise the price per square foot, but for a 2,000 square foot property with a 450 square foot garage, the price per square foot will still be multiplied by 2,000 and not 2,450. For this reason, it may be beneficial to convert any unfinished areas of a property into usable space before selling.
Location is hugely important in bestowing value upon a property. You may have noticed that property values in cities across the country have ballooned in recent years. One of the reasons for this is that as an area gets more urbanized it offers more opportunities for jobs and career development, which draws in potential buyers. As demand then increases, the value of the limited supply rises. On the other hand, if a major employer in an area closes or goes out of business, the property values in the area may drop since the wave of people moving out will raise supply at the same time as demand diminishes.
Then again, within the same city or town there will likely be districts or areas with higher property values and others with lower. In one area houses may be priced in the millions while just a short distance away they may be less than half of that. There are several factors that affect this. In our area here in Florida one of the biggest such factors is distance to water. Houses with direct beach access are especially pricey as well as those situated on a canal. Other factors include distance to school and school quality, distance to commercial centers, shopping, and recreation.
The value of a property zoned in a residential area close to great schools and a thriving business community will appreciate faster than others. While these factors are largely outside of homeowner’s control, they are important to consider when buying a property or determining sale value.
One way that property value is calculated for a house going on the market is to look at other houses for sale or sold in the area. These are called “comps” and can be helpful, but they must be considered appropriately. Applicable comps must be sold or for sale in the same time period, they must be in the same area, and must feature similarities in architectural style, number of rooms, property acreage, age, and features such as a finished porch or pool. It is usually advisable to consult a real estate agent before determining which comps are applicable.
Home Condition and Renovations
New and newer homes typically sell for higher prices. This is because as a house ages, certain aspects–like the roof, the electrical system, plumbing, etc–may lose efficacy and need repair or replacement. The current condition of the home is the final factor that we will discuss in relation to value. Critical components of a property can deteriorate over time and must be inspected prior to buying or selling.
The following should be inspected before a house is appraised to be put on the market: windows and doors, the roof, the HVAC system, and the wood (in case there is any rot or pest damage). If anything is found damaged or lacking, repairs should be done or even full system replacement. Upgrades, such as replacing the roof with higher quality shingles, can even increase a property’s appraised value. Interior renovations, such as painting the walls and replacing flooring can also go a long way. Finally, the property must be made presentable to the eyes of the buyer. A clean and aesthetically pleasing property will sell more quickly and at a higher price.
While many of the aspects discussed above are outside homeowner’s control, it is important to keep in mind how they affect the price. It is also necessary to take care of the factors that are able to be controlled, such as the condition of a property and its curb appeal. If you have any questions about the condition of your roof or need roof repair or replacement in the Palm Coast, Flagler, or Volusia area, please give Florida’s Best Roofing a call and schedule a free estimate at 386-263-7906!