How Much Is My Home Worth?

How much is my home worth?

It’s the question most frequently asked of real estate agents.

The simple answer is that a home is worth what a willing buyer will pay for it, and that depends on a number of factors.

Since our tastes change, no list of what’s attractive to homebuyers will remain completely consistent from year-to-year, but some factors of home evaluation never change.

Location

A home’s location has a great deal to do with how much it’s worth. Aside from neighborhood, there are many other aspects to the “location” label.

For instance, while there is no consensus, one study finds that a single-family home with a view may be worth up to 8 percent more than comparable homes without a view.

Other value boosters include homes near a new Walmart; they experience a 3 percent increase in value. Homes within walking distance to Starbucks will be worth more than those further away and if the home is within walking distance to Trader Joe’s or Whole Foods, its value will be boosted by as much as 17.5 percent, according to Zillow’s researchers.

While it may sound surprising, Redfin’s researchers found that homes located within 50 feet of a cemetery fetch more money per square foot than comparable homes located further away.

Negative impacts on home values include a nearby landfill or dump. These homes take a 7.3 percent hit on value, according to Mandi Woodruff at businessinsider.com.

A sex offender in the neighborhood drags down home values by as much as 12 percent and a neighbor who experiences foreclosure will ding your home’s value by as much as $7,200, according to Woodruff.

Age, size and condition

The age of a home, in relation to those nearby, has an impact on what a home is worth. Newer homes surrounded by older homes will be worth more, while an older home in a neighborhood with newer or upgraded homes may be worth less.

By comparing your home to recently sold homes, both your real estate agent and the bank’s appraiser will use the size of your home to determine what it’s worth. The question is: How much are buyers willing to pay for homes of a similar size?

The condition of a home includes amenities, upgrades and how well the home has been maintained. If nearby sold homes offered amenities that yours lacks, the value of your home will be less.

The flipside is true as well: if your home features amenities lacking in nearby homes, your value will increase.

Updated homes are worth more than those that haven’t been updated and rundown homes aren’t worth as much as well-maintained homes.

The economy plays a role in home value

The microeconomic law of supply and demand helps determine how much a home is worth. When there are lots of buyers in the market (demand) but few homes for sale (supply), home prices increase. When a home has plenty of competition but there are few buyers in the market, it will fetch less money.

The economy at large plays into the supply and demand factor. For instance, when interest rates rise, many budget buyers are locked out of the housing market thereby diminishing demand.

A booming economy, however, with rising wages, helps to mitigate the effect of high interest rates on the housing market.

The best way to determine how much your home is worth is by asking a real estate agent. Most are happy to provide you with a complimentary, no-obligation Comparative Market Analysis (CMA).

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