As members of the real estate industry, we get asked about home values all of the time. Below is a list of the top 10 factors that we think are big players when it comes to determining the value of your home.
1. Condition of the Property
Obviously, this is the number one thing that effects the value of a property. The important thing to remember here is that even if a home is well maintained, that doesn’t mean that it is up to the current standards of what is most desired by current home shoppers. This is also something that a real estate agent or home stager can help you determine for your home.
2. Location, location, location!
People always say the 3 most important criteria in finding a home should be Location, Location and Location. This is so important and we can’t emphasize that enough. So much of a home’s value is dependent on location: whether it is landlocked by a good or bad area; if it is close to the interstate; what life opportunities are around it. So many people move to Nashville not knowing the areas and buy something that is a great “value.” This is usually because the resale value in that area is so low due to location alone. Buyers should always put resale value of a particular area of town first. This is something that is important if you are staying in the house for two or 50 years.
Is financing readily available for the resale of your property? This has impacted condos tremendously in the past. Many condos are now having problems getting financing due to a new regulation that does not allow conventional or FHA loans to be done on any unit that has someone in the complex that owns more than 1o percent of that particular building. This is a new regulation, and it is effecting everyone in the situation the same. The only way to get a loan on a condo in this situation is to get a local bank to do an in-house loan for a potential buyer. This is usually at a higher interest rate and there is a lot of red tape involved. There are only a few banks in Nashville that can do this. The only other alternatives are to get a cash buyer or convince the investor that owns more than 10 percent to sell so that it frees up the complex to qualify for FHA or Conventional loans again.
4. Supply and Demand
This is the most basic of principles. The higher the supply of similar houses on the market, the lower the value your house will have; the more supply that is on the market, the more people will have to cut prices to sell their home. The opposite is also true. If there is very little supply of similar houses on the market, then you can demand more of a premium for your home. Seasons play a big role in this. It is a true that usually the number of homes that sell between April and October are significantly higher than the amount of homes sold in the colder months of the year. This is mainly due to school systems being out in the summer time. School systems affect not only the kids, but also the teachers, the parents, the grad students, and many other jobs and industries. Because really, no one wants to move midway through the school year.
5. Foreclosures or Short Sales
This has become a very common part of the market over the past couple of years. As the number of foreclosures and short sales has increased, the value of many properties have decreased as well. The only way to compete with many of these low priced homes is to drop the price of your home. When buying a house, you need to consider the amount of homes that are also available as foreclosures. It is always better to buy in an area that still has a lower percentage of these so you don’t have to worry about it when it comes time to resale your home.
6. Tax Credits
The tax credits of the past few years have changed the market dramatically and the number of homes sold has drastically increased due to these credits. This has thrown the common seasonal home sales off and also depleted the supply in many areas. This is good for anyone wanting to sell now, but it could have some negative long term effects.
7. Surrounding Developments
Many times a property’s value will increase or decrease due to the commercial or residential developments located nearby. This can have a positive or negative impact. For example, if a race track is torn down and a commercial shopping center with a grocery store or major department store goes in, then the value is increased. If an aromatic restaurant goes in that makes your condo smell strongly all the time, that would decrease your value.
8. Natural Disasters
This is something that has obviously impacted Nashville greatly just in the past couple of years. Since the flood of May 2010, many homes have not been rebuilt and even houses in neighborhoods that had some flooding have been affected in resale value, even though they may not have been affected by the flood themselves. People don’t want to be surrounded by other homes that have flooded and they don’t want to be in a neighborhood that is empty due to a natural disaster.
9. Job Market
Ultimately, home prices are driven by the average income in given geographical areas. The economic climate of an area is directly proportional to the value of the surrounding real estate. This is not as evident in a larger city as it might be in a small town where a large plant or company either shuts down or grows tremendously.
10. City Obstructions or Restrictions
Everyone knows that they don’t want to have an interstate in their backyard or that they don’t want the noise of a train waking them up in the middle of the night. But the other factors of the city can be equally important are current zoning, utility easements, your lot’s building window, or historic commission restrictions. These factors can effect your future plans for your home or the future plans of a potential buyer.
If you would like us to help you assess the value of your home, click here and fill out the contact form. We will get in touch with you and help you figure it out!