When it comes to property value, it is affected by a number of external factors. Some of those factors are obvious. Others, not so much. Regardless, all of them influence property value to a certain extent. Below, we are listing some of the most important ones.
Location of the property
This is an obvious external factor that determines the value of a property. A property that is in close proximity to schools, shops, cafes and restaurants, and public transport is sure to be worth more compared to properties that aren’t. The same goes for properties located in or near the city center.
Generally speaking, people prefer to live in areas where they can both work and spend their time after work, so it makes sense that properties in such areas will be pricier as they are more sought-after. The unemployment and crime rates in the area will also largely influence how the property is perceived and determine its value accordingly.
Space and size
Square footage and usable space are other important factors to consider when determining property value. A larger home with more bedrooms and bathrooms will generally be more appealing to home buyers, as these are some most sought-after features. Garages, outdoor entertaining areas, guest bathrooms, and swimming pools are also considered a big plus and will certainly help bring the house value up.
In urban areas, parking spaces are also highly valued, and their absence or abundance will influence the price of the property. Certain areas of the home are not counted as usable or livable square footage (attics, basements, garages, etc.), so keep that in mind as this will largely determine the house value as well.
Features and upgrades
Aside from the size and usable space, you also have to consider the features that the property offers. Generally speaking, buyers are willing to pay more for homes that include expensive features such as high-end appliances, high-quality flooring and fixtures. Aside from luxe features, the appraisal value of the home will also be determined by the repairs and upgrades that were made to the property.
Dramatic damages can result in drastic drop in the perceived property value, so it pays to invest in some cosmetic touch-ups before the house appraisal as it can boost the price of the property. Of course, this will depend on the severity of the damage. Tackling termite damage certainly isn’t the same as fixing the peeling paint, but tackling both repairs is sure to make a good impression on the appraisers.
How much energy is needed to keep the property running is another thing that will affect property value. A property that is properly insulated, equipped with energy-saving appliances, and has eco-friendly features such as solar panels, energy-efficient lighting, and double-glazed windows is sure to be valued more compared to properties that aren’t as energy efficient.
This energy efficiency translates to lower gas and electricity bills, and it’s not limited to indoor spaces only. Public facilities can also benefit from installing features such as energy-efficient LED lights for streets and public roads as they can help keep the electricity bills down while also being more environmentally friendly. On the plus side, such features can help ensure optimal visibility and functionality of such fully operational spaces, contributing to safer urban and intercity traffic.
Condition and age
It makes sense that a newly-built home property would have a greater value. Modern, energy-efficient appliances and fixtures as well as newer plumbing and electrical systems give occupants peace of mind as they’re less likely to break down any time soon. This means there’s no need to spend money on upgrading the existing features. This isn’t the case with older properties as they usually require repairs and upgrades in order to optimize them and reduce expenses.
For instance, getting a home with a 20-year roof warranty isn’t the same as buying an older home with a roof that may need to be replaced a couple of years after moving in. It’s always a good idea to inspect the property beforehand and address any repairs that need to be tackled and negotiate them to avoid making expensive upgrades and repairs upon purchasing the property.
The local market
You can have the most amazing property at a great location, with state-of-the-art appliances and premium features, but its value will still be largely influenced by the local market. The number of the buyers in the market as well as the number of properties on the market will determine whether it’s a buyer’s or seller’s market. When there are more buyers than properties, it’s a seller’s market. Therefore, the properties are less likely to stay on the market for too long.
Conversely, when the number of properties that are being sold is greater than the number of buyers in the market, it’s a buyer’s market. It’s not unusual for properties in such a market to sit longer on the market. Always keep in mind the market conditions regardless of whether you’re buying or selling.
Whether you’re buying or selling a property, it’s important to understand the factors that are driving its value. It can help you price your property for sale the right way and it can also help you avoid making costly mistakes when buying. Keep these factors in mind and ensure you’re always making an informed choice.
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