Understanding your home’s market value is beneficial in many ways, even if you’re not planing on selling this year. It helps you understand your property taxes and insurance premiums and also helps you make choices about both the necessary and cosmetic renovations you might be considering.
What is Market Value?
A property’s market value is, quite simply, the value it holds in the current market–in other words, if it were put up for sale today. The main factors affecting the market value of a property are:
- External Features. Features like the garage, garden, yard, drive-way, etc. Are these features in good repair? Do they need any updates or extensions?
- Internal Features. This category covers everything from the structure of the interior walls and floors to the age of the appliances. The most important interior features for buyers seem to be the kitchen and bathrooms. Market value heavily depends upon these areas of the house, so if you’re considering renovations to boost your home’s value, focus on this area.
- Location. Location is a big factor when accounting for the market value of any property. The better the location is, the better the market value of the property. What constitutes a “good” location obviously varies based on personal opinion, but certain neighborhoods remain more desirable than others. If you have questions about the details, talk to a real estate agent.
- Demand. Is it a buyer’s market or seller’s market? You can control demand to some extent by considering your price point. If it’s a seller’s market and your home is not as updated as others, offering it at a lower price will help sell it more quickly. If it’s a buyer’s market, you home needs to be priced appropriately because buyers have so many choices.
Evaluating the Property
This is the time to call in a real estate agent. They will asses the condition, internal and external features, and the location and let you know if it’s a property in high demand or not. A good agent will show you comparable sold homes so you can better understand your home’s market value.
Understand Demand: Look at the Market
It’s hard to understand market dynamics just by looking at your immediate area. Instead do some local research to help you understand the demand for properties like yours and better refine your value estimate. Again, a real estate agent can be quite helpful here, as they have access to local and national market information.
As you look at the various near-by properties already on the market look at their price, size, and what features sales materials highlight. This will give you an outline of the local demand for similar properties as well as a sense of what might make your property stand out. If demand is lower, clues about which features or price points attract buyers become even more valuable.
If you’re thinking of selling, this is useful information to review with your real estate agent to determine how best to market your home. If you’re not as interested in selling, by reviewing your market value with a realtor you may find you have extra equity in your home. You can use this to upgrade its condition, so your home is ready when you are.