There are multiple key elements at play when determining real estate value. Here are some of the major factors to help understand the numbers.
One major factor is found in the well-known phrase “location, location, location”. This doesn’t just go for the location of a business and its success rate, but it also transfers over to home real estate value.
The exact same home in two different locations can sell for hundreds of thousands apart. The proximity to job opportunities, personal services, entertainment and dining options all play a part in the value of the nearby real estate. However, proximity to a noisy railway, stinky sewage treatment plant or an eyesore such as vandalism decreases the interest and value of the area.
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The next major factor in real estate value is the square footage of the space. Whether it’s a sprawling ranch-style home, cozy bungalow, functional condominium, or other style property, the buyers want to ensure there’s enough space to meet their needs.
This is one of the reasons many homes listed for sale have the price per square foot listed. Comparing the price per square foot to other comparable homes will give an idea whether the price is fair or if it’s high for the area’s going rate.
However, price per square foot can be misleading when there are other aspects that increase the home’s value such as acreage, a shop, an in-ground swimming pool or another amenity that isn’t included in similar size homes.
Rooms/Living Spaces Offered
Another major factor is the number of bedrooms, bathrooms, and other living spaces offered. Not only does this impact the real estate value but it also influences the livability of a household in the space. A family with kids may be searching for enough bedrooms to allow each child their own bedroom. Needing more than one bathroom for the household’s size may also be on the buyer’s list of needs.
Sometimes the rooms can be easily converted. The possibility of a den being used as a bedroom by simply adding a small closet or wardrobe should be stated in the real estate listing to ensure potential buyers don’t exclude a home based on their needs.
In addition to all the above factors in real estate value, the last but certainly not least, is amenities or special features. As mentioned above, this may include acreage, a shop, surround sound wiring, an in-ground pool, or just about any “extra” that can be offered to sweeten the deal.
This is where hilltop or water views can bring in some added cash, as most people are willing to pay more for this privilege. Making sure views are advertised in a real estate listing is vital.
Also high on many buyers’ priority list is property and privacy. A treed setting that keeps out city sounds, a gated driveway or extra outdoor living space can be a feature that sells a home, even when the home does not check every other box on the buyer’s list.
While home availability doesn’t directly play a part in the real estate value of an individual home, it can certainly impact how much potential buyers are willing to pay. For example, if a family is looking for a single-level home with handicap accessibility and there are no homes that meet these criteria, their willingness to pay more will likely increase so they can get what they need.
Many families look at the public schools in an area and want to purchase a home in a specific school district. This factor can impact the price point when there is a low inventory of homes offered in that school district. Think supply and demand…but in one of the biggest purchases a person makes in their life.
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In summary, location is key, followed closely by square footage, rooms and amenities available. Home availability will drive the market up or down, but specialized needs such as a single-level home or fantastic school district can make a home or an area highly desirable.
Whether you’re searching for a new home and are trying to understand the home’s value prior to placing an offer, or are in the process of selling your home and want to list your house accurately, please feel free to contact our office at any time and we would be more than happy to assist you with all of your Arizona Real Estate needs.