One of the guiding principles of economics is that something is as valuable as someone is willing to pay for it. That doesn’t mean that every salesperson can name a price out of the blue and expect their clients to bite the bait.
Anyone with experience in the real estate market will tell you how often the initial evaluation can be far from the real value. The actual home is only one factor contributing to the overall price. Before pinning a number, one must be familiar with the other factors influencing that figure.
State of the Market
The rule of supply and demand dictates the economy. If there is a shortage of houses, for example, and a lot of people are buying, the prices will stand high and keep rising.
The state of the national economy, additionally, affects the value. In prosperous times more people participate in this market; thus, agents can afford to put a high price on a house.
When someone purchases a house, they don’t pay for just four walls covered with a roof, but for all the other homes in its surrounding. The demographics of the neighborhood, the quality of the school system, and crime rates are amongst the essential price deciding factors.
Although the neighborhood itself plays a crucial role in price evaluation, there is more to the location than the closest surroundings. Every block, suburb, or community is part of a larger unity – town or city.
Inside this unity, we can find entertainment opportunities, like the cinema or malls. Job opportunities are another deciding factor. You can get a house at a lower price if you have to travel miles to reach the closest grocery store. The ideal home is neither too far nor too close to the rest of the town.
Age and Condition
Older homes sell at lower prices. The reason is straightforward: the chances are that new buildings are in better condition and don’t require maintenance as older estates do. But that doesn’t mean that you should avoid old houses. There are no holes that cannot be filled, according to the Dominion Roofing Company.
The size of a house is the last entry on our list, but maybe the number one factor when evaluating home value. Some buyers rely solely on the capacity when putting the price tag. People with experience in real estate apply a number for every square foot.
Larger houses are valued more. The sole number, however, is not the defining factor. Agents and homebuyers also take into consideration the layout of the house. It is found that traditional and neutral arrangements appeal to a broader market. Homes with unique designs have their audience, but it lowers the overall home value.
Putting a price on a home can be an ungrateful task. Is the price too high? Will it offend the potential buyers? Will I lose money if I sell the house? And many other questions make evaluation even harder. The most accurate way to put a price tag on a home is by analyzing a couple of factors on their own.
While the economy influences home value in the background, the neighborhood the house is situated in plays an equally important role. Additional important price defining features are the state of the residence and its size.