Buying a home requires a lot of patience and research. How do you know if the seller is asking a fair price for the home? Before you buy it, you should know what affects the market value of a home as well as how you can find out about how much the home may be worth.
The Most Recent Sales
The most recent sales in the area are one of the largest factors in a home’s market value. That’s why when there’s a whole slew of foreclosures in the area, it can be bad for a home’s value. If homes are selling for a low price in your area, chances are that non-foreclosure homes will lose value too. This can be good for you as a buyer, but obviously not for the seller.
Typically, appraisers use homes that are of the same size and have the same features. Ideally, they should use homes that sold within the last six months and that are located within a mile or so of your home. Obviously, if you live in a large neighborhood with cookie-cutter homes, your comparable sales will likely be a lot closer than a mile away.
If you want to know the fair market value of a home, you can look up the recent sales in the area. While you won’t know too many specifics, you can see a ballpark figure for what you could expect your potential home to sell for on the market.
When you buy a home, you don’t just buy the home you live in, you invest in a neighborhood. The condition and convenience of that neighborhood plays a role in a home’s value. For example, if you are looking at a home that is out in the middle of nowhere and you have to travel 30 minutes just to get to a store, the home will be valued on the lower side. If you find a home that is right in the middle of town and close to everything, though, the value may be higher.
Appraisers also look at the quality of the schools, the crime rate, and the convenience of the home’s location when determining a home’s value. Obviously, the highly sought after school districts will help a home’s value increase, but if a school district is on the ‘less sought after’ side, then the value of the homes in the area might be lower than you’d expect.
Size and Appearance of the Home
Square footage can play a role in a home’s value. The bigger the home is, the higher its value, usually. But, if the appeal of the house isn’t there, the size may not matter. Along with size, appraisers look at the home’s layout. How convenient is it for families of all types? Is it a common layout or one that was designed for a specific person that others may not like? If that’s the case, it can negatively affect the home’s value.
The Home’s Condition and Age
It’s a general consensus that the older a home is the less it’s worth. While this can be true in theory, it’s not a hard and fast rule. There are plenty of older homes in great condition that sell for as much as new homes in the area.
Typically, though, older homes need more work and have more issues. A new home will obviously have fewer issues and have more up-to-date utilities and features that make it easier to live in without trouble. Just the updated features can help new homes be worth slightly more than old homes, but age alone doesn’t define a home’s worth.
The Market Itself
Supply and demand play a large role in how much a home is worth. You could have a brand new home in an area of high value homes located in the heart of the town that isn’t worth as much as you might think because there just isn’t a demand right now.
Typically, the larger the demand for homes in the area, the higher the price of the home becomes. It’s called a seller’s market because there are more buyers than sellers, which can make the price of the home soar. When there’s not a hot demand for houses in your area, the market could fall. This time it’s a buyer’s market because they could have the pick of any homes in the area.
As you can see, the market value of your home is a fluctuating number. There are many pieces to the puzzle that you must put together to determine the value of a home. Keeping an eye on the market and knowing the general price that homes in the area sell for can help you have a good idea on how much to bid.Click to See the Latest Mortgage Rates»