Here are 11 key factors that influence your home valuation
Article Source: https://www.property24.com/articles/here-are-11-key-factors-that-influence-your-home-valuation/31475
Article Date 15 Jan 2023
Every homeowner wants the best possible return on their investment, but the highest valuation is not necessarily the right valuation and listing a property at an inflated selling price is likely to result in the property selling for less than it should have after a longer period on the market.
Cobus Odendaal, CEO of Lew Geffen Sotheby’s International Realty in Johannesburg and Randburg, says: “It’s critical to price your home correctly right from the beginning because when buyers have as much choice as they currently do, they generally prioritise value for money and, if yours is over-priced, they’ll probably opt for a similar home at a better price”.
“Additionally, if a buyer does make an offer, and the appraised value comes in significantly lower than the agreed-upon selling price, the bank could decline to provide the buyer a mortgage.”
Odendaal says that it’s understandable that sellers often find it difficult to be objective about the value of their properties because, unlike other investments, people have both a financial and emotional stake in their homes, especially if they have lived there for a long time and have upgraded the property.
However, at the end of the day, your home’s value is based on what buyers in the current market are willing pay, and this market value is also contingent on numerous key factors that will be taken into consideration by agents and appraisers.
Location
One of the key factors taken into consideration when valuing a home is its location and this not only relates to the suburb in which it’s located but also where it’s positioned within the neighbourhood. Additionally, a suburb’s value is based on numerous factors including proximity to schools and hospitals and other amenities such as parks and shopping centres.
Structural elements and condition
These elements include the materials used to build your home and/or for recent upgrades. Often, the value may increase if your home was built more recently with modern materials, however, this is not cast in stone as well-maintained older homes in desirable architectural styles with original features could attract even higher valuations.
It’s therefore critical that homeowners don’t let necessary repairs and maintenance slide and, before placing your home on the market, it’s a good idea to give the exterior a fresh coat of paint and to fix any obvious issues like broken fences or damaged roof tiles.
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Age
There are pros and cons to buying older and newer homes and a new home doesn’t necessarily appraise higher than an older home. Generally speaking, homes built within the last 10-20 years, are less likely to have major issues and are lower risk to buy which may increase the home’s appraised value but in some markets, older homes located in historic districts will demand higher prices in the market.
Square meterage
Size does count and, although there are exceptions, a larger home with more liveable space is typically worth more than a comparable smaller home within the same market.
Once the total square metre number has been determined, the agent or appraiser considers how the space is distributed throughout the home, taking into consideration how many stories, how much is usable, how much is liveable.
Number of rooms
The number of bedrooms and bathrooms as well as reception rooms will also impact the overall value of your home. Your agent will compare your home to others in the area with the same, or similar, number of bedrooms and bathrooms to make a value comparison.
Architectural style
Depending on current trends, the overall design of your home will probably impact its value to at least some extent.
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Kerb appeal
Your home’s exterior aspects, including general landscaping, may also impact its value and although it’s not possible to allocate a specific Rand amount to your beautifully landscaped garden or pretty fence, when taken into consideration along with the overall condition of your home, it will make a difference.
Recent renovations
Recent renovations, especially kitchen and bathroom upgrades, will always have a notable impact on your home’s valuation. So, if you are considering making improvements before selling, focus on these rooms as you’re likely to get a higher return on investment.
But, be careful not to over-capitalise as take top-of-the-range gourmet kitchen may not be what buyers in your neighbourhood or looking for – or can afford.
Garage
When assessing a home’s garage (or lack thereof), the agent will take into consideration a number of factors including: proximity to house, whether it offers direct access, size (single or double) and also additional parking space.
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Storage Space
Given a choice between two very similar homes, most buyers would opt for the one with ample storage space so the amount of storage your home offers is typically noted by agents when doing an evaluation.
Current real estate market
Supply and demand, one of the primary drivers, will shift over time and the current state of the local market therefore has a significant impact on the final appraisal of your home. If the market is saturated with buyers but there are few houses for sale, home values will typically be on an upswing and vice versa.
“Every homeowner obviously wants the best possible return on their investment, but the highest valuation is not necessarily the right valuation and over-valuing a home is likely to result in the property selling for less than it should have after a longer period on the market,” says Odendaal.
“Every real estate agent will tell you what they think you should list your home for, but the ‘how’ is much more important and a good agent understands how to build a competitive pricing strategy, can clearly explain how they got to the number and isn’t afraid to push back and tell you the truth.”
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