When you engage a Realtor to sell your house, one of the first things you will do together is determine the price you will list your house for. Your Realtor will ask your opinion of what you believe your house is worth. They will most certainly offer their own opinion as well.
Your Realtor will not use an exact science to arrive at your house’s list price. Their years of experience selling homes in your neighborhood should give them at least a rough idea of what a house like yours would sell for. That said, home appraisal does consider several factors when it is done correctly. Here are some of the things an Action Realty of Detroit Lakes team member does before we confidently advise a list price to one of our clients in the greater Detroit Lakes, MN area!
Location
Harold Samuel coined one of the truest phrases in the real estate world: Location, location, location. It is the reason why two otherwise identical houses will sell for very different prices if one is located in Manhattan and the other is in Odd, WV. Two identical homes could sell for significantly different prices if they were situated in adjacent suburbs of the same city. Even neighboring houses will fetch very different offers if one borders a busy road and the other doesn’t!
Realtors take several factors into account while evaluating a home’s location, including crime rates, school rankings, proximity to services and places of interest, and whether there are many rental or foreclosed properties nearby. Desirable nearby features like bodies of water, bike paths and playgrounds will improve a home’s market value; undesirable ones like prisons, landfills and factories will negatively affect it. In some instances a home’s location may also give it speculative value – say, for example, if a large business has recently announced plans to build new nearby headquarters.
Curb Appeal
Here is another factor you’re surely also well aware of. “Curb appeal” refers to the buyer’s impression of the home at first sight. A house that is surrounded by lovingly tended trees, shrubs and flowers is bound to create more positive impressions than one that sits amid dead trees, puddles and vehicles which haven’t been able to move on their own accord since the Reagan administration.
It’s important to bear in mind that extremely impressive landscaping may actually scare potential buyers away. Many people don’t want to commit to performing so much maintenance!
Numbers of Bedrooms and Bathrooms
Unsurprisingly, its numbers of bedrooms and bathrooms have a massive impact on a home’s market value. A home with a single bed and bath is bound to attract the least interest, largely because no family of any size would want one. Note that a 1BR/1BA home may earn a higher price if it provides space for its next owner to add more of these desirable rooms.
Square Footage
As you have likely already gathered, a home’s square footage has enormous bearing on its market value. What many people overlook is the quality of a home’s square footage. Two houses may both offer 2,400 square feet on paper – but if one is a fully fleshed out two-story and the other sits atop an enormous unfinished basement, the house with more liveble space is vastly preferable to most potential buyers.
Although they don’t technically provide additional living space, homes which boast larger garages and more storage space (i.e. closets, attic, usable basement) are more desirable than those that don’t.
Age of the Home
A home’s age does affect its market value, but the rule is not constant. Homes built within the past two decades typically have the fewest problems, and are accordingly lower-risk investments for their next owners. Homes which are older than that frequently need repairs to their roofs, foundations and frames, and their values often suffer for it. But very old homes – especially ones that have provenance, are located in excellent neighborhoods and have been expertly maintained – are only helped by their advanced ages.
Style of the Home
Certain styles of homes are more desirable than others. It’s easy to appreciate why beach houses are the most desired homes (hint: they are located next to beaches). Mediterranean, shingle, Spanish and Northwest contemporary are also highly sought after home styles. Mobile homes, prefabricated homes and shotgun-style homes all occupy the bottom of the list in terms of desirability.
These are admittedly extreme examples, and a beach home in Hermosa Beach, CA will sell for a higher price than a mobile home in Mobile, AL for many reasons beyond the two houses’ different styles. Naturally, you cannot change the style of your home, but you can give it broader market appeal by avoiding dated decor and finishes.
HVAC
The mechanisms a house uses to heat and cool itself have a marked impact on its market value. Purchasing a home with an ancient furnace is an unappealing prospect to many. Likewise, a home with central air instead of a few strategically placed window units will typically earn a higher price as well.
Recent Renovations
Potential buyers are bound to take note when a house has been recently remodeled. New flooring, new siding, upgraded insulation and renovated kitchens are all updates which boast excellent returns on investment. Even smaller touches like a new front door and freshly treated deck are greatly appreciated by buyers.
Comps
Unless you live in an extremely remote area, similar homes to your own have recently sold nearby. These comparable homes (aka comps) aren’t identical to your home in every possible way, but they do give your Realtor a solid idea of what kinds of offers buyers would make.
Thanks to the magic of the Multiple Listing Network, any Realtor who’s familiar with their market is able to provide a list of comps quite quickly. If you’re considering selling your home, commercial property, hunting land or farmland in the greater Detroit Lakes, MN area, then we welcome you to contact Action Realty of Detroit Lakes today for a list of comps that will give you a fairly accurate idea of what we could sell your property for!