Buying a home is a beautiful thing! It shelters you, gives you a space to start a family, and is an asset you can appreciate in value over time. But besides all this, knowing what the resale value of this huge investment will be in the near future is very important.
In fact, it should be the first thing you evaluate before closing any deal you have going on right now (if you're planning to buy a house). According to a recent report by the National Association of Realtors, the median tenure for homeowners in the United States is 13 years, which means that many homeowners will eventually face the need to sell their property.
This is why considering the potential resale value from the start will help you make a more informed decision and potentially yield a higher return on your investment in the long run.
With that said, here are five ways you can assess any home's resale value.
Understand the Local Market
Home values can vary widely between cities and even neighborhoods. In a neighborhood where comparable homes top out around $400,000, even a stunning million-dollar renovation won't allow you to demand real estate prices far above that market maximum.
Well-funded areas with high-paying job markets, low inventory, high demand, and impressive new construction will, of course, support higher property valuations.
The opposite is true for regions with troubled economies, excess homes for sale, or other market challenges. As with any commodity, prices ultimately come down to supply, demand, and what buyers can afford.
So, research recent sale prices of comparable homes in your area to get a more accurate sense of what buyers are willing to pay should you resell.
Evaluate Location and Neighborhood Amenities
A home's neighborhood is one of the biggest factors affecting its value. Buyers don't just purchase a property. They buy into an entire area and lifestyle.
Amenities like good schools, low crime rates, parks, restaurants, and entertainment all raise what locals are willing to pay. Convenient access to highways, public transit, and job hubs is also very desirable.
Residential real estate brokerage firm Redfin found that in 2013, being located near a top public school increased a home's value by $50 per square foot on average, while proximity to a top private school raised it by $38 per square foot. Additionally, recent research by Play World showed that homes within walking distance of parks sold for around 8–20% more.
On the flip side, things like high taxes, poor air quality, excessive noise, and a lack of amenities nearby can drag down resale values in an area. Ultimately, a neighborhood considered safe, quiet, and family-friendly will allow you to ask top dollar.
Consider Home Size and Usable Space
Square footage is one of the first things buyers look at, but layout and usability matter just as much as total space. Today's buyers want open-concept floor plans, ample storage, and plenty of practical living areas.
"Outdated homes with closed-off rooms and wasted hallway or entryway space can appraise lower than a modern open floor plan of equal size," notes real estate expert Jared Sandel of The Friendly Home Buyer, a renowned group of home buyers in Florida. "I always advise sellers to consider how functional and livable their square feet actually feel."
Desired features depend on the buyer, but ample closets, basements or attics for storage, flexible rooms that can serve multiple purposes, and well-designed kitchens and bathrooms can all increase value. Conversely, chopped-up layouts with rooms of odd size or shape can turn buyers off.
Observe Curb Appeal
First impressions matter, and a home's curb appeal is the first thing a buyer sees when they inspect a home. A tidy landscape, an appealing exterior, and a welcoming entryway are vital elements that entice potential buyers and increase the resale value of any home.
In fact, a study by the Journal of Real Estate Finance and Economics discovered that homes with immaculate landscaping were perceived as 7% more valuable than a comparable house with unkempt greenery.
An attractive front door also raised "perceived" valuations by nearly 7% as well. Fresh exterior paint, clean windows, beautiful outdoor decor, and an overall well-maintained exterior do wonders for increasing that emotional "wow" factor in any buyer.
On the inside, updates like new floors, modern lighting fixtures, fresh neutral paint colors, and contemporary fixtures in kitchens and baths signal good pride of ownership to buyers and appraisers alike.
Consult with Local Experts
While online resources (like the blog you're reading now) and personal research can provide solid advice on ways to know your home's worth, consulting with local real estate professionals can offer invaluable insights into your home's resale potential. Consider:
- Requesting a proper comparative market analysis (CMA) from a real estate agent
- Hiring a professional appraiser for an unbiased valuation
- Seeking advice from home stagers or interior designers on marketable improvements to make
"Realtors have their fingers on the pulse of the local market and can offer professional guidance tailored to your specific property," says income-producing real estate management firm Monarch Real Estate. "Using real-time data and their personal experience, these experts can provide a more accurate reflection of what your home is truly worth."
Wrapping Up
While these tips will help you set the right figure on your home (or the home you're about to buy), don't let it limit your evaluation process. Work with experts to get a more precise property valuation and use their guidance to make better-informed choices.
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