5 factors that influence your home's resale value

Thinking about selling your home? See what determines your property's market value.

By MSN Real Estate partner Jul 11, 2014 9:16AM

Home for sale (© Phillip Spears/Getty Images)By Susan Johnston, U.S. News & World Report


U.S. News & World ReportWhile home sellers hope to get top dollar for their property – and some have an inflated idea of what to expect – establishing a home's value can be a complex, multifaceted process. Do home renovations really pay off? And which is more valuable: a three-bedroom or a four-bedroom with the same square footage? We talked to real estate insiders to find out.


1. Location. The classic real estate refrain says, "location, location, location." Location includes factors such as the price of recent nearby transactions, the quality of local schools and whether the area has a strong sense of community. "Buyers increasingly value community in the community where they're buying," says Amy Anderson, an agent with Davidson Realty, Inc. in St. Augustine, Florida. "They come to me not looking for a house for four years, but focusing much more on the community, the activities and the school district."

As Americans scale back their dependence on automobiles, some homebuyers seek out communities that don't require cars to get around. One resource is WalkScore.com, which rates neighborhoods throughout the U.S. based on access to public transit and proximity to grocery stores, parks and more." I think walkability has become more important in many markets, especially amongst millennials," says Ken Wilson, president of the Appraisal Institute, a professional association for real estate appraisers, and founder of Wilson Realty Advisors in Dallas. "You're also finding empty nesters that are looking into properties that have walkability."


But as Zillow.com chief economist Stan Humphries points out, location encompasses many other considerations. "Does it have a view? Is it a waterfront home?" he asks. "What's it next to? Is it near retail establishments? Or a highway?"

 

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2. Size and layout. While homebuyers used to swoon over ample square footage, many have fallen out of love with the McMansion. "I think people realize when they buy a 3,300-square-foot house, they’re not getting what they thought they were," Anderson says. "There’s more upkeep and a lot more involved with taking care of these huge houses."


Layout is a key factor because an open-concept design can look much more spacious than a boxy space of the same size. The number of bedrooms also influences a home's value, so think twice before putting up a wall and subdividing one room into two. "Adding a bedroom will take away value," Humphries says. "Fewer but larger bedrooms tend to boost value."


3. Age and condition. Historic homes (assuming they're livable and well-maintained) and new homes are typically more valuable than homes built somewhere in the middle. "Generally, as a home gets older, it becomes less valuable," Humphries says. "Then there's a U-shape where, at some point, homes become so old that they have historical significance. A home that's built in 1910 is probably more valuable than one built in 1970."


Age aside, condition matters too. "Someone will pay $15,000 more for a well-kept house that’s move-in ready than they will for a house that needs $5,000 worth of work," Anderson says.


4. Upgrades. Renovations play into a home's value, but if your home is considered "over improved" compared with other properties in the neighborhood, it can actually hurt the property's value. "You want it to be common for the neighborhood or subdivision," Wilson says. "It wouldn't hurt to visit neighbors' homes or visit a home via an open house to see what people are marketing [before undertaking big improvements]." You could also hire an appraiser to prepare a feasibility analysis that will help you determine the impact of renovations on your home's value.


Unless you live in an area where granite countertops and built-in wine fridges are the norm, Humphries says you might be better off saving the money and choosing more basic finishes. "It's harder to recoup [your investment] if you guild the lily, if you will, on granite this and chrome that in your kitchen," he says. "You're spending a lot of money on something that might have a lot of personal taste attached to it."


However, you should keep records of repairs and upgrades to show potential buyers that the home has been well-maintained.


5. Negative events. If your property has issues like mold or experienced a fire or was the site of a violent crime, it could be a harder sell – and command a lower price. "Nowadays, people are very concerned if there was a fire, prior mold damage or even if there were some sort of death or crime at the property," Wilson says. Federal law requires the disclosure of all known lead-based paints, but state laws vary in whether the seller must disclose issues related to natural disasters or crimes committed on the property.


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Tags: selling
 
45Comments
Aug 16, 2014 7:57PM
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Scottsdale AZ. McCormick Ranch HOA. The ranch has over 4,400 homes, commercial and retail properties in zoned areas. Mission statement of the HOA. 'The HOA is dedicated to maintaining a safe and sustainable community, while increasing the value of it's owners' property through the prudent use of resources for the benefit of all who live, visit or work in the association. The HOA will adhere to and ENFORCE the governing documents and CC&R's while planning for the future'. Have lived here since 1978. Properties are as pristine as always, common areas are extremely well kept and of course homes sell for top dollar. A condition of sale is to transfer a copy of the CC&R's to the new owners. The transfer fee is $300.00. There is never an excuse of "I did not know".
Aug 16, 2014 6:58PM
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Well,well! Seems the enlightened voter of late are finding their "Hunger Games" neighborhoods are not what they had envisioned. 2 choices: find a way to make or steal millions or #2 enjoy your "new neighborhood" !!
Aug 16, 2014 4:19PM
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Try selling a very nice house in an area where today we had two people shot while in their houses.
One with fifty bullet holes and the other was almost beaten to death.  On the news it is normal to
hear about another shooting and a sheriff talking about laying more cops off because of money.
I will sell you my house and will present with a 357 pistol so you can feel safe.  
CRIME PAYS
NO NEED TO WORK
SHOPLIFT
STEAL FROM THE NEIGHBORS
RECEIVE FOOD STAMPS
RECEIVE GOVERNMENT SUBSIDIES
BE DEPENDENT ON OTHERS
BE LAZY
THE POLICE DEPARTMENT CAN NOT DO ANYTHING

Aug 16, 2014 2:43PM
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Funny, no mention of what color your neighbors might be. This can have a negative affect on the sale of a home.
Aug 16, 2014 12:18PM
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I agree with TheAlabamman, check wood smoke---we have two neighbors and pocket size lots and I can't tell you the days and nights we could not use our property and  got sick form all the smoke and stench.  Pay attention to overly bright lights left on all night--the direct  illumination from neighbors across the street and the glare into your house and in our case right through our entire house renders our porch useless even with sunglasses on at 9pm-let alone sitting comfortably in our living room and dining room--the bedrooms look like we live in  he land of the midnight sun. But thank fully, the city made them remove the yellow and red floodlights---when you see a 10x20 foot driveway where the owner blocks his lights from his properly by fences and a tree and has four lights on that illuminate 5 properties, don't buy.  Respectful home owners that are rationale don''t do that. 
Also, pay attention to large windows facing the property on second story houses around you--we have one and they have 107 inch TV facing out--it's a second story media room and our view and horizon in our yard and entire east side of our property is what ever they are watching ---and they don't care--it is like living next to a drive in theatre.  You can't hide from it or block it.  
Aside from this,  we have  DIY and unauthorized construction all weekends, into the night and on holidays---the noise is a whole other issue.  So, really check out the area, weekends, night, etc. A house is a huge investment.  Oh yes, the neighbor across the street has  solar globe lights lined up-they can't see them, but  lined up with our front door and windows, the fluorescent colors change every 4 seconds and believe me, that alone will kill the sale of a house--we know that!
Aug 16, 2014 9:00AM
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A few words here; make sure that you scope out the potential homes neighborhood and immediate neighbors over a week end. You can end up with a neighbor who parties long and hard and loud the entire week end...every week end. Find out if these neighbors keep lawns mowed and if they have small/large dogs that they let bark around the clock. Make sure these neighbors don't burn lawn/wood clippings every week end along with garbage items which can make you ill while smelling them. Check and find if any of your potential neighbors are listed on sexual predators lists. I know...I said only a few words here, but I presently live next to all of these mentioned. Beware.
Aug 16, 2014 8:44AM
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The trouble is.....the neighbors trash starts to pile up, and all the neighbors hide and do nothing about it. So then another neighbor does the same, and pretty soon you have a ghetto. A ghetto starts one house at a time. Then the druggies start to move in, and the schools go to hell, and crime gets out of hand. Now no one wants to live in "that" neighborhood.  All because the neighbors didn't have the balls to call on the neighbors that were so lazy they let their house go that started the decline. Can't tell you as a Realtor, how many times I've seen it happen. The pig next door is costing you 10's to 100's of thousands of dollars. If the cops really wanted to stop crime they would start with being vigilant about the dumps in the neighborhood - it is the beginning of a major downturn. The nosey Rosies in the neighborhood actually keep the values up.
Aug 16, 2014 4:04AM
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People usually go buy first impression. They have a list of what they want and what they will settle for. Location is a huge deal and maintenance is the 2nd most important. But if someone doesn't like the first impression, the 2nd will never happen. People also are buying what they can afford on that day.... not the future......so says the bank!!! You never know when disaster will strike and then you are in BIG trouble.
Aug 13, 2014 7:31AM
Aug 13, 2014 5:44AM
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Having sold real estate for a number of years......at last a report that makes sense.   And with buyers and sellers just when you think you have seen it ALL.....something else happens. Let's face it, they are all human beings.
Aug 13, 2014 4:55AM
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This article was written in 1980.
Nothing has changed only the price has gone up...

Aug 13, 2014 4:53AM
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Would never by a house that was historic. Anything you want to do to the house has to be approved
Aug 13, 2014 4:39AM
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Is the neighborhood full of Mexicans and  or Illegals? Kids with Boom Boxes? Druggies and crack houses? Gearheads that scream up and down the street in their hot rods?

Aug 13, 2014 4:18AM
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Built a 1800 sq. foot split floor plan, ranch home in 2008 in a rural area but only 17 miles from a vacation city; so not much traffic. Has all the bells a whistles. New granite counter tops were put in last year and 1200 square feet of hard wood flooring 3 years ago. I also have what has been said as "a million dollar view". All said and done we have approx. $200,000 into this house. We would like to move to a 55+ community but when I called an agent for a market analysis she told us to list our home for $119,000 and if we were really serious list for $109,000. We can't afford to give up that much money and payout a 6% commission as we would need it to move. I meet everything on this list with no disasters. Where is this recovery I keep reading about? Not here!
Aug 13, 2014 12:00AM
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What is this rubbish?? As if the average american can afford to buy a home. The american taxpayer has spent all his/her money ($1.41 trillion) murdering innocent and new-born children in Iraq and Afghanistan. They have no money left. Many live in Tent City with their kids. This is very good. It is just -desserts for their american terrorism they unleash upon innocent people. I laugh and clap at the sight of americans losing their homes on TV from the security of my home (mortgage paid out) in the UK. I particularly like it if they have kids!!! LOL!!! 
Jul 14, 2014 10:20AM
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Does the writer really thinks that purchasing a new home is like buying a new car that depreciate when driven off the lot?

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