What is Your Home Worth?
Your home is one of the biggest financial investments you will make in your life. Doing what you can to protect that investment is crucial. If you plan on buying a home or selling your home in the future, it’s imperative to understand what factors affect your home value.
Some factors are in your control, while others are not. It can range anywhere from home renovations, location, amenities, home size and the risk of natural disasters. So in order to help you pinpoint the factors you should look out for, here are four elements that may influence your home value.
Location and Neighborhood
“Location, location, location!” You may have heard this time and time again, but location is one of the key factors that can determine a home’s value. It’s important to look into the education system, crime rates, employment and local amenities, all of which can increase (or decrease) your home’s value.
These factors have an influence on why some neighborhoods and locations offer a higher home value than others. If you’re planning to sell your home in the future, there are also many other factors you may want to consider, such as the home’s proximity to a city or the closest available transportation. When it comes to determining a home’s resale value, location can be even more important than the size, age or condition of your home.
Home Size and Renovations
Home size is another important element to consider. Generally, the bigger the home, the higher the value. The value of a home is usually estimated by the price per square foot and the sales price divided by the square footage of the home.
Beside home size, appraisers will look at how much usable or livable space is available in your home. Generally, garages, unfinished basements and attics aren’t counted as usable space. However, the amount of bedrooms and bathrooms is found to be the most important to home buyers.
If you plan on selling and want to increase your home value before putting it on the market, you can take out a renovation loan to add more rooms or any other additions to your home. According to the National Association of Home Builders, renovations can increase a home’s value by nearly 20 percent.
Age and Condition
Age and condition are also two important factors to the value of your home. The older the home, the less valuable it becomes. New homes are worth more because there is less for a home buyer to fix. It’s less likely to have plumbing, roofing and electrical issues.
Let’s say a roof has a warranty for 20 years. That is money the homeowner can save on, compared to an older home that may need a roof replaced in a year or two. Home buyers are willing to pay more for a home that is ready for them to move into.
However, if you own a older home that has historical significance it may be valued more, but its age and condition will still be factored into the overall value of the home. If its well maintained it can achieve a higher valuation similar to a newer home.
So, it’s important to always try to upgrade and keep up to date on improvements to your home to continue to keep the value at its highest.
Weather will also play an important role in the value of your home. If you live in an area that is prone to floods, tornadoes, earthquakes or any other natural disasters, your property value is going to take a hit. A home situated in an area that is known for disastrous weather is not going to be as appealing to home buyers because it comes with a larger risk.
Even with homeowners’ insurance to cover the damages that may occur due to the weather, it’s still going to be harder to sell your home because home buyers will still be apprehensive about moving to an area with a high risk of disasters, especially if it has happened in the past.
Keeping these factors in mind, you’ll be able to better protect your investment for longer. Then, when it comes time to sell your home, you’ll find the payoff well worth the work you put in.