How Much Is Your Home Worth?
With websites like Zillow stamping an arbitrary home value that anyone can see at the click of a button, we need to be savvy about what the true value of a home is. While online estimates can do a lot to convince people, a recent survey showed that 12% of the time, Zillow’s estimates were off by 20% or more.
Of course they will be! Zillow can’t see the kitchen updates you just put in. Zillow doesn’t understand how great the woods behind your house are. There’s a lot more to the value of your home than a comparison with your neighbors. However, with all the free information available, we are much more able to track and analyze what contributes to the value of a home. And the results are often quite surprising.
What contributes to the value of your home? How does it fluctuate? How can you make it more valuable?
Location (of Course)
We know this is the ultimate mantra of real estate investors and developers. But sometimes location can have more implications than you think. It’s not just about which school district a house is in, or what the crime rates are like around the area. You might also consider its adjacency to shopping centers. One survey found that living within .5 miles of Walmart increases a home’s value by 1-2%. And then there’s the Starbucks effect, where we see that proximity to a coffee shop changes a home’s value significantly. Over 17 years, many houses within a quarter mile of a coffee shop almost doubled in value. Even houses farther away saw 65% appreciation within the same time frame.
Consider proximity to parks and green spaces, too. Green spaces aren’t just a cosmetic benefit. People who live close to parks and open spaces report higher levels of health and happiness, even when you discount factors like income and socioeconomic status. In fact, being within walking distance of a park even influences longevity!
Size, and the Number of Bedrooms and Bathrooms
This is an obvious factor in the value of your home. That’s why one of the primary pieces of information in a listing is the number of bedrooms, bathrooms, and the square footage of the house in question. When comparing your house to others in order to determine its value, look for comparisons that have similar size and rooms. While you’re at it, consider this: the number of bathrooms and bedrooms is even more important than the bare amount of interior space. One of the most effective ways to add to the value of a home is to add another bedroom or bathroom, if you can.
Supply & Demand
Perhaps the hardest thing to understand about the value of your home is the supply and demand. It fluctuates over time–even from one day to the next. To put it simply, it’s all about whether more people are buying or selling at the moment, in a specific area. However, there are many nuances and complicated factors that contribute, as we saw with the recent Panama Papers scandal.
This might be the most interesting factor that determines your house’s value. One reason for this is that it’s all about perception. Different buyers will seek out different things. For example, one person might fixate on a breakfast nook, while another considers how much they’d pay for the beautiful greenscaping in the front and back yards. While real estate investors might make more cold-blooded decisions, families usually look for a place that they feel a kinship to… somewhere that just “feels” like home.
Sellers can use this to their advantage by investing in improvements that give a lot of percieved value, even if they cost comparatively little. One way to do this is by staging. In staging, a professional decorates the home to give a modern, luxurious look, and make it easier to envision living in. This might include carpeting, furniture arrangements, and window dressings.
Sellers also improve the curb appeal of their house with thoughtful interior upgrades and landscaping. Here are a few things that you can do to immediately improve the value of your home:
- A new coat of paint on the exterior, and neat roofing
- Upgrades to the kitchen and bathrooms, particularly the counters, flooring, and large household appliances
- Trees, especially in the front yard