Discovering your home’s value takes a little time and occasionally a bit of money, but it could be worth the peace of mind.
At some point during your online ventures, you’ve probably seen ads that offer to tell you how much your home is worth. They state that all you have to do is enter your home address (and subsequently your e-mail) and you’ll find out your home’s value in seconds. Is that really possible? Without knowing the details of your home, can a software program accurately tell you how much your home is worth?
The answer is, “Not accurately enough”. Although a software program may be able to give you a generic estimate based on public records (which can themselves be incorrect), the final number it provides may vary considerably from the actual price for which you could sell your home. These sorts of programs utilize data such as lot size, number of bedrooms, number of bathrooms and sometimes comparable homes that have sold in the area. However, when determining the true value of a home, there’s a lot more than these items to take into consideration.
Home Value Factors
Your home’s value depends on a number of factors. Five top factors are:
- In addition to the state and city in which the house is located, location also refers to things like the quality of schools, sense of community and “walkability” (how close you are to significant locations like stores, schools and houses of worship). Drilling down even further, location also includes proximity to local beaches, highways, primary points of interest and even the “view” from different points within the house.
- Age & Condition. As with most depreciable items, the older the home, the lesser its value. Of course, there are some historic homes (those built in the early 1900s and prior) that become more valuable with age, but those situations are uncommon. There’s also the condition of the home to take into consideration. Has it been properly maintained inside and out? Does it need to be painted? Do the wood floors require refinishing? Typically, people are willing to pay more for a house that’s “move-in ready” than for one that needs a lot of work.
- Have you kept up with the times? For instance, homes with kitchens and bathrooms that have the same furnishings, floors, cabinets and sinks from the 70s will hold less value than those that have been more recently upgraded. It’s also important to keep maintenance and renovation paperwork so when it comes time to sell, potential buyers can see that you’ve worked to help keep your home in top shape.
- Size & Design. With the cost of utilities and maintenance increasing each year, 3,000+ square foot houses are no longer the rage. Potential buyers are looking for something more “manageable” to both afford and maintain. Design and layout are also major factors in the value of a home. These days, those homes with a more “open concept” layout versus homes that are “cut up” and “boxy” tend to achieve higher resale value.
- Previous Negative Occurrence. Mold issues, fire damage, death, crime. These are some of the negative events that could result in a decrease in the value of a home. Although the mold or fire problem might’ve been resolved and properly eradicated, a potential buyer might fear the issue could reoccur and/or might worry the issue wasn’t fixed to the buyer’s standards.
The Ultimate Factor… An Appraiser.
An appraiser is a professional who will tell you, for a fee, how much your home is worth. The importance of an appraiser’s review is that he or she will make certain that maintenance, upgrades, improvements, etc. made to your property are included in the value. In addition, the bank of any potential buyer requiring a mortgage will want to see the appraised value of the home to ensure it’s not over-lending.
Some of the factors an appraiser includes in the final report are:
- Curb Appeal
- Construction and Structural Issues
- Home Maintenance (i.e., condition of drywall, paint, foundation)
- Appliance and HVAC condition
- Price comparisons to homes sold in the same area
The appraised value your appraiser determines can have a big impact on the list price of your home. So if you do decide to get an appraisal, make certain to have paperwork ready to show the appraiser all of the work, maintenance and upgrades you’ve done over the years. You might also think about making small updates in order to get the best possible appraisal – and hopefully – the best possible price for your home.
From mortgage calculators to credit card consolidation calculators, myfico.com is a great resource for credit education. And remember to visit myFICO forums where people just like you are always sharing their financial experiences and advice.
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