How is the value of my home determined?

As a real estate agent, a question I often hear from homeowners is, "How much is my house worth?" While it may seem like a simple formula, there are a number of factors that impact the value of a home. Some of the factors can be easy to determine, while others are more complex and can require a higher degree of competency and understanding. In this post, I am going to focus on three specific aspects of your home: the location, size, and condition.

Most people can guess the most popular response to the question, "What is the value of my home?" Location, location, location. Location can be different when looking at different markets as a whole (i.e., Chicago vs. Los Angeles vs. Denver vs. Grand Rapids), but it can also be different locally (i.e., Rockford vs. Grandville vs. Grand Rapids). A comment I often hear, especially from buyers, is a disbelief that the market could possibly go much higher in Grand Rapids. This often comes from people who have lived in West Michigan their entire lives and have only known lower prices. The past few years of high-level growth are causing people to ask, "When will the bubble pop?" I discussed this more in my first post, "Should I Hold Off Buying a House in West Michigan?" I discussed how Grand Rapids is an expanding market and should be viewed accordingly.

Looking locally, a home in an area or city with high demand will cost more than the exact same home in a different area or city with lower demand. Demand can be impacted by a number of different factors, such as school districts, proximity to businesses, shopping centers, recreational activities, and access to public utilities and highways. If your home is located near or on the water, that can substantially impact the value of your home as well. While this is a well-rounded list, it is by no means exhaustive. There are many elements of location that can factor into how in demand an area maybe.

Location is a key component of determining the value of your home, but it is by no means the only consideration. Another aspect of determining your home's value is considering the size of your home. This component can become a bit trickier, because not all square footage is the same. A couple different pieces to this puzzle include quality and even the layout of the square footage (i.e., usability). A home may have the same square footage, but the usability of the space may be limited (chopped up spaces, for example), or the quality of the materials could be different from one home to the next. A granite countertop or high-end cabinets will increase the value of a house compared to laminate counters or builder-grade cabinets.

Finally, the age and condition of a house will also play a role in determining the value of a home. A home built in the early 1900s will generally be lower in value when compared to a home that was built in the 2010s. This is true for a number of reasons. For one, the quality of materials will be up-to-date with the current standards for the critical parts of the house. The materials used to build the house will also be newer, reducing the likelihood that repairs will need to be made as quickly. If a home has holes in the walls or doors, is dirty, doesn't have landscaping that has been kept up, or in general hasn't been taken care of, this can impact the value of the home as well.

While there are other factors that impact the value of a home, the location, size, quality, age, and condition of the home are a few of the major contributors. Many people will jump online and get an idea of what their home is worth from a website. While this can be fun to do and can give you a basic idea of where the market is at, it certainly has its limitations. A website is only able to consider limited factors when determining your home's value, such as the surrounding area, recent previous sales, and the size of the home (if it has been updated and has the correct information). As a result, these can often be incorrect.

The best way to determine the value of your home is to speak with a real estate professional in your area. They have access to the most up-to-date information on the market and can compare the other homes sold in your area and adjust for any differences between your house and those that sold. The only way to know the exact amount your house could sell for is by listing it on the open market. A real estate agent can discuss a strategy with you to help you get the best offer for your house.

***Want to know what your home is worth? Send me a message to start the conversation. I'm happy to help! If you aren't in West Michigan, no problem. I'll help you get connected with an all-star agent in your local area.***