The value of the property fluctuates as there are many factors affecting it. A solid market finds values rising, based on the economic condition of the area, jobs, availability of mortgage funds, location factors such as improvements in neighborhoods, and the house itself. When they fall, the same factors are calculated, and a dictatorial situation is reflected in a decrease in property values. Additional factors also skew the market value. The factors affecting the vale of the property vary from sector to sector.
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Factors that determine the home’s value
- The Economy
If jobs are scarce in your locality, with layoffs occurring and homeowners put in jeopardy, values fall and fewer people can afford to buy a house. The owner will shut down their prices to compete in the market. Short sales and foreclosures become more dominant and values are skewed downward.
There are no strict regulations on how to maintain if your home is outside of a controlled community, either a homeowner’s association or planned unit development. Your yard may be immaculate, but your neighbors may be surrounded, with trash, unused cars haphazardly parked on their front lawns which will surely decrease the value of the home.
Bad schools, closed shopping centers, poor medical facilities, and road work all contribute to the devaluation of your home. Apartment prices in certain areas are strongly affected by crime in its neighboring zones, regardless of the type of crime.
A landfill leaking methane, reports of a cancer cluster, or the installation of a power plant nearby all leads to a decrease in the home prices. A study has reported that the construction of a power plant within two miles of a home reduced its value between 4 percent and 7 percent. Hazardous waste sites decrease the value of the property up to 15-percent.
- Internal Appearance
Old fashioned kitchens and baths appliances or driveway cement that is cracked, extensive clutter, and a long maintenance list devalue a home. Add in a roof and an air conditioning system that’s in bad condition, no home warranties, and the lack of a garage, and your home’s value is dragged down.
- Foreclosures and Short Sales
If your neighborhood has a surplus of homes available as short sales, the fair market value of your home is devalued. Buyers can purchase lower-priced homes nearby. To compete with this environment, you must show that your home is worth the additional money it’ll take to buy it by making improvements and presenting a quality home.
The street appeal of a property should never be misjudged. The first impression that property makes on its buyer is an important factor in determining the value of the property. It is a key factor that contributed towards the instant addition or subtraction of lakhs of rupees to or from the property’s value.
- Renovation potential
The potential for growth is important for both homebuyers and investors — the potential to add an extra bedroom or extra story, the potential to increase the floor space, etc. If there’s scope for a buyer to improve and personalize a property through a home renovation, the re-sale value of that property will increase.
- Investment potential
The value of a property is also influenced by the way it is presented to investors. The rental income an investor expects from a particular property and the expected capital growth, all play a vital part in the valuation of a property.
- Energy efficiency
The property that is made of the high-quality build is more energy efficient as they make the property or building earlier to cool and heat. Given the high price of electricity and gas bills, items like solar panels, insulation, and double-glazed windows can add value and appeal.
- Future development can change the value of a property for better or for worse.
Homeowners should not only be conscious of current local facilities, but they should also be aware of the forthcoming commercial and municipal developments in the area, such as plans for parks, schools, hospitals, and public infrastructure, that may impact land values.
Successful real estate investors look beyond the attributes of home purchases and focus on a property’s potential for land appreciation. This requires a search for the most attractive houses in a target location and concentrating on those that provide opportunities for improvement. It is very important to know the actual value of the property before buying or selling the property. Listed above are certain factors that, may affect the valuation of the property, however, factors such as crime rates and employment should also be considered. Thus it is efficient to work with a known real estate agent who has professional qualifications and also possesses some experience with property valuation and appraisal in the local area.