Median sale prices have been on the rise for the past two years now and last summer they reached another all-time high. It is clear that a lot of this has been due to a simple equation of low supply with greater demand. However, what about on a micro level within a specific market? What factors drive the price of a particular home in a particular place?
An appraiser shares that pricing often is based on three factors: location, product and timing. Product and location are in large part connected where it can be a great home in the great neighborhood. Timing is more of a fluctuating variable where it can have to do with what the local competing inventory is at that given time.
How Appraisers Establish Value
Appraisers will approach the value of a home beginning with a physical inspection of the home’s structural elements. This will include items such as roof, HVAC system, bathrooms, kitchen and the general condition of everything else. The appraiser will then account for location and neighborhood which will include researching the comps and adjusting the price based on comparing your home to those.
Home Features Currently in demand
These items can have a big impact on the price. Granite counters used to be a hot and highly sought after item, but today they are just considered standard. Design trends are indicating that interior colors have switched from beige and brown to more of shades of gray. These along with other preferences are sometimes regional including having a pool or a second story which may or may not add value.
How a Seller can add Value
There may be specific trends for a particular market, but one thing that is universal is to have your home in excellent condition when listing it on the market for sale. If you have put off making some repairs or improvements then taking care of them now is always best. Buyers often pass on a home if there are obvious signs of neglect. Additionally, the more significant repairs will certainly be found in a home inspection anyway. Finally, be sure that your home’s exterior is looking perfect. Your home’s curb appeal is very important being the first and last thing that every buyer will see.
Traps to Avoid
In markets like the current one we are in, there can sometimes be multiple offers and bidding wars. When this occurs, the purchase becomes more emotional than practical. Don’t lose sight of the property’s true market value and replace it with your own. Additionally, if you are planning on getting a mortgage then your home will need to appraise appropriately otherwise the deal will fall through.