How Much Is My House Worth?
Purchasing a home is the greatest financial commitment a person will make in their lifetime. In fact, on average, Americans spend 37 percent of their household budgets on mortgage payments, so it makes sense that homeowners want to know what their property is worth.
The issue, however, is that a large number of American citizens aren’t sure what to consider when evaluating their home. That, or they often base their assessments on factors that aren’t relevant from a real estate market perspective, such as wanting a certain amount of cash in pocket from the sale, or having emotional ties to the property.
In today’s post, we’ll be discussing the steps homeowners can take to accurately value their residential properties and secure the best rate for their unit.
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What is House Value and How Do I Determine It?
“How much is my house worth?” seems like a very straightforward question, but the reality is that it’s a complicated one to answer. By definition, home value is the amount for which a house is likely to sell. But here’s the thing— determining that speculative number is a delicate science.
It’s not uncommon for homeowners to check their local listings, figure out what nearby properties are selling for, and put their home on the market within the same price range. Another common strategy is to base the price on tax assessments. The problem with these methods, though, is that they don’t always reflect the fair market value and can actually hinder the sale of your home. So, before drawing your own conclusion, it’s always worthwhile to get some expert advice by asking an experienced local real estate agent “How much is my home worth?”.
What Factors Contribute to a House’s Value?
There are quite a few factors that reputable real estate agents consider when calculating the value of a property. Below are a few of the most important conditions that must be taken into account:
Local Market Trends
It is impossible for your agent to conclusively answer “What’s my house worth?” without factoring in the current state of the local real estate market. If your area is experiencing an economic downturn, housing prices will reflect that, and you may not be able to list as high as you would have liked. On the other hand, if your neighborhood or community is in high demand, it will be more likely that your house will sell at a higher price point.
Age and Current Condition
This is one of the most critical considerations when it comes to home appraisals. Many sellers are frustrated by their real estate agent’s response to “What is my house worth?” because as the homeowner, they may have overlooked these key components. If your home is one of the oldest in your neighborhood and newer builds have been selling at high prices, that doesn’t automatically mean your home will fetch the same offers. Similarly, if other homes in your area have been renovated and updated, but yours hasn’t, you will be at a disadvantage when it comes to price.
Size and Special Features
Did you know that the most-purchased homes in America are 1,900 square feet with three bedrooms and two bathrooms? Or that features like walk-in master closets, kitchen islands, fireplaces, hardwood floors, and stainless steel appliances can increase your sale price? A seasoned home value estimator will take an inventory of these characteristics when determining the listing price of your home. Additionally, if you have the available cash flow, it may be worth your while to invest in upgrading some of these features in your property before listing.
What is Market Value?
Fair market value, also referred to as market value, is an estimation of what a particular property will sell for based on two key factors: supply and demand, and comparable sales within close proximity of the property being listed.
While there is no standard for calculating this figure, many real estate professionals conduct their own research and deduce a property’s market value based on their findings.
Market value is important when listing a property because buyers and sellers can often have opposing views on how much a home is worth. Market value gives both parties a clearer understanding of what the local market dictates the price should be.
How Does My Home’s Value Affect What Financial Decisions I Can Make?
The value of your home can impact many financial opportunities, not just the sale of your home. The answer to “How much is my house worth?” is actually an extremely beneficial figure to have in your back pocket, as it can provide individuals and families with a significant amount of financial leverage.
Let’s say one of your family members has fallen ill, and you need a lump sum of cash to cover the medical bills. Knowing how much your home is worth can be helpful if you decide to remortgage to obtain those funds. Remortgaging a home often comes with lower interest fees than lines of credit or credit cards, which is often a much-appreciated benefit in times of uncertainty.
Alternatively, you may want to know the market value of your home if you’re preparing for retirement. Most individuals begin considering downsizing or selling during this phase of life and having a clear understanding of how much value your home holds can help you make the best possible financial decisions for the future.
How Can I Increase My Home’s Value?
After asking “What’s my home worth?”, most homeowners want to know what they can do to make their home more appealing to potential buyers. Investing in renovations and upgrades can be a lucrative decision, but it is crucial for property owners to know which projects yield the best return.
Below are some of the most value-adding home renovations and upgrades:
Cosmetic Bathroom Enhancements
Despite what you’ve heard, you don’t need to spend a small fortune to make a return on a bathroom project. Minor upgrades like a new coat of paint, switching to dual sinks instead of one, and refreshing shower tiles are enough to add value. In fact, many bathroom renovations return as much as 102 percent of your investment.
Finishing a Basement
Completing the lower level of a home adds livable space and makes your property far more attractive to buyers. While the ROI isn’t as high— at around 70 percent of your investment—homes with finished basements do tend to sell more quickly, increasing the likelihood of securing a quick sale.
If you’ve been thinking “I want to increase my home’s value”, the solution could be right under your feet. Hardwood floors are a highly-desired feature and are one of the most affordable ways to amplify your home’s appeal. Many flooring companies offer sales on a regular basis, and if you’re handy (or know someone who is), you can do your own installation for additional savings. Most hardwood floor upgrades recoup anywhere between 80-100 percent of the initial investment.
As you can see, real estate agents and other industry professionals take a multitude of factors into consideration when responding to “What is my home worth?”. These realty experts come armed with the latest data, comparables, and market trends to help you make an informed and well-founded financial decision regarding your property.
Have you been wondering “How much is my house worth?” At Main Line Homes, our agents have more than 20 years of sales and marketing experience, making us uniquely qualified to assist you. If you’re interested in Main Line real estate, Contact us today!
Janis Peterson, REALTOR®, GRI, ABR, SRES, CSP
Main Line Homes Luxury Real Estate Agent
Keller Williams Main Line
6 Coulter Ave
Ardmore, PA 19003