The housing market continues to heat up and sellers are hoping to cash-in on the frenzy.

However, some sellers have tunnel vision in regards to what really affects their home’s value -“Everyone’s gonna love my man cave I built in the basement”, or “We just had a new roof installed, so the value increases by at least 20%” doesn't necessarily mean the same thing to the buyer as it does to the seller.

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We spoke to real estate professionals to find out what really affects the value of your home.

1.) Neighborhood

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Data has showing that home buyers consider the neighborhood to be one of the biggest influencers in determining whether or not they will move forward making an offer on a home. Nearby schools, in particular, weigh heavily on a buyer’s decision.

Make sure that either yourself or your agent does a nice presentation on the amenities and benefits of living in your particular neighborhood.

Too many times, sellers focus only on the features of their particular home - they forget to mention anything related to the neighborhood.

2.) Historical Sale Price

The starting point of pricing any piece of real estate, is usually the “comparable” sales in the area as related to the home in question.

More often than not, homebuyers will also look at the the historical sale price of the property; i.e., how many times has it sold in the last 10 years and at what price? If you recently bought it for $150,000 and you’re now asking $250,000 or more, well that throws a big red flag to buyers.

Historical prices are commonly used against you as a bargaining tool for homebuyers, however, if you can justify the increased asking price with solid data regarding growth in your neighborhood, comparable sales along with cost of upgrades, then you have a solid argument.

Always keep your prior renovation costs in order - you never know when you might need them.

3.) The Market

Your surrounding market will greatly influence your home’s value. Just like most anything else for sale, your home is based on supply on a demand. So if there is a shortage of available houses in your neighborhood, your home’s price will increase based on its relative perceived value to buyers.

If possible, you’ll want to work with your agent in timing the release of your listing when there isn’t a lot of inventory on the market. Realizing this isn’t always possible, you’ll want to do your best in finding out who in the neighborhood is thinking of selling and where they are in the process. This will help you time your sale just right.

4.) Negative History

Some things are a natural deal-breaker for buyers, such as a death on the property. In California, for example, sellers are required by law to disclose such occurrences. Obviously, this depends greatly on the nature of your property and whether it lends itself to being developed.

If something negative has happened on your property, it’s best to disclose it early in the process - as the last thing you would want is for buyers to back out after you go into escrow.

Also, it would be worth it to call the city and find out if you are in a development area and how much extra can be built on your lot - as developers would be less bothered by negative history than an average home buyer.

5.) Age and Condition

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Every homeowner eventually goes through a period of having tunnel-vision; that rust on the railings, chipped paint, cracked tile, sun faded garage door, it all just blends into the background as the years go by.

However, homebuyers will surely notice homes which are not well-maintained.. and in fact even factor these repairs in to their offer, or worse yet, ask for a credit to fix them.

As a homeowner and potential seller, you must look at your home objectively and consider fixing all the little things you’ve been putting off for years.

Making Improvements

Making improvements to your home is a great way to increase the perceived value of your home. Especially, when you are able to make good choices that are somewhat neutral among most homebuyers. Utilizing the help of a qualified designer, or even using a website like Houzz.com will help improve your chances that your improvements will be received favorably.

In an article recently posted by Reverse.org, here is a list of improvements which return the most ROI for your home:

Updating the plumbing and electrical where needed is a project with an estimated 260% average return on investment. Making these updates will not only add equity to your home, but will make the selling process smoother as you will have less disclosures to tell potential buyers.

  • Upgrading your kitchen and bathrooms is a project with an estimated 168% average return on investment. Depending on the state of these two rooms in your home this can either be minor fixes and polishing or a complete remodel but makes the presentation of the home so much more appealing to potential buyers.

  • Internal paint at an estimated 148% and external paint at an estimated 76% average return on investment are something to consider if your home is getting a little dreary looking. Lighten up the spaces inside to make them look roomier and add curb appeal to your home with these two projects.

  • Yard improvement projects have an estimated 426% average return on investment. Storing equipment out of sight by adding a small shed and having a landscaper add appealing low maintenance shrubbery can add to the appeal and functionality of your home.

  • Flooring is a popular choice when it comes to equity building. This can be replacing or cleaning carpets at an estimated 105% average return on investment or replacing/repairing new wood or tile flooring at an estimated 101% return on investment.


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