Many homeowners are intimidated by the notion of assessing the value of their home, but it is not nearly as complex as many realtors might make you believe. Any homeowner can evaluate the value of their home simply by following these five simple tips.
1) Compare Your Home with Similar Homes in Your Area
There are two groupings that homes will fall into:
- Recently sold homes whose purchase price is easily accessible via the land registry
- Homes that are still available for sale within the same price bracket as yours, attracting interest from your potential buyers
As you peruse these homes, look for one that is most reminiscent of your own property.
Finding a similar property on your own street will allow you to get a good grasp on what your property might be worth. If you can find a property that is much like your own and has been already sold, this can give you the best approximation of the price that your own home might be able to get. However, the real estate market is volatile; properties that are priced significantly lower or higher than those that were sold six months ago can be an indication of the way that the market is moving.
2) Apply Adjustment Figures
If you can’t find any properties that are similar to your home in your particular area, you will need to use adjustment figures to ensure that the price on your home is commensurate with other homes on the market. You can examine the cost recovery, or how much the property value has increased as percentage of the cash the homeowners put forth to improve their home, of the homes against which you are comparing your own property. There are a few improvements that will gain back one hundred percent of the money put forth into the improvements, and they are as follows:
- A spare bedroom that replicates the style of the existing home
- Opening up the kitchen to make the space an open kitchen diner
These improvements will get back fifty percent of the cash put into them:
- Updating the kitchen with more modern appliances and cabinets
- Converting the loft
- Extending the roof over the ground floor
This improvement will return twenty-five percent of the homeowner’s investment:
- Landscaping the garden
A homeowner must also be wary of improvements; sometimes, they can actually decrease the property’s value. An improvement that is unattractive or poorly crafted will reduce the property value of your home, and even something seemingly practical as double glazing could hurt the potential value of a period home.
3) Location Location Location
The location of your home is important when you are determining the value of your home. Houses in quiet residential areas are generally valued at a higher rate than those located on busy commercial streets. There are a couple of factors to consider as you evaluate your location:
Is your house close to public transportation? City commuters will pay more money for a home that is close to their commuter train line, shaving time off their commute, than a home that is further away.
How are the schools in your area? As parents require more from their children’s education, a home that is located in an excellent school system is bound to be more highly valued than a home that is outside of the school system, even if the latter home has better features.
4) Avoid Comparing Your Home to New Developments
People are willing to pay a premium for a home that no one has ever lived in before; you cannot compare your pre existing home to these properties.
5) Be Prepared to Defend the Price of Your Property
Some buyers might question your valuation of your home, so you should be prepared to provide evidence for your decision. Be sure that your argument is legitimate with plenty of valid information.