This article throws light on the factors to help you determine your home’s worth. It also emphasizes the importance of calculating the market value of your house. So, keep reading.
“How much is my home worth?” This question may come to your mind several times. And it should be. It is one of the crucial steps when transferring property, hence, one must be aware of his house’s market worth. It helps one make informed property decisions and ensure fair transactions.
If you’re a first-time seller of your property, a bunch of factors will help you calculate its worth and market value. The following discusses those elements in detail.
Factors to Determine the Market Value of Your Home
Before we look at the factors determining the market value of your home, let us first understand what market value means.
What is Market Value?
Market value, under normal conditions, is the price at which a property could be sold. Normal conditions exclude conditions like relocation or sale of the property due to unforeseen circumstances. It is based on a bunch of factors, including external, internal, geographical factors, and market dynamics.
- External Factors
As the name suggests, the external factors include the condition of the property from the outside. How does it look when one views it from the outside? Is it attractive? Is it appealing to others? The architecture, water, and sewage system, roads, and pavement are other exterior factors counted to know the house’s worth.
- Internal Factors
These factors include:
- Size of the house/apartment/property
- Quality of construction
- Number of rooms in the house
- Whether furnished or unfurnished?
- State of home appliances and devices
Regarding the construction quality, it is important to calculate the way the property was built while determining the market price of the house. This also includes the material and labor used, interior fittings and fixtures installed, the number of floors, and the builder who has built it.
- Geographical Factors
The geographical location and the area surrounding it are among the crucial factors that tell the market value of the house. The surroundings tell:
- If the area is developed,
- Is the neighborhood safe,
- If it is in close vicinity to basic amenities,
- Is there good transportation around,
- Is there enough greenery for better air quality? And more.
If your house is located in the center-most of the city, its market value will be more than others. The location of your house will not only affect the monetary value, but the type of customers too. Proximity to schools, colleges, banks, hospitals, and offices will also influence the final price of the house.
- Market Supply & Demand
The market dynamics also play a significant role in determining the market value of a house. The rise and fall in the market price depends on the demand and supply of the property in a specific region. It is calculated by comparing the number of homes available in a region with the number of buyers there and how swiftly the property gets sold in that region.
Now that we know the determining factors of a house’s market value, let us understand how we can calculate it.
How to Calculate The Market Value of a House?
The following ways will help you calculate the market price of your house:
- Online Market Valuation Tools
- House Price Index Calculator by Federal Housing Financing Agency (FHFA)
- Comparative Market Analysis (CMA) by a Real Estate Agent
- Assistance from a Home Appraiser
How Does Market Value Analysis of Your Home Benefit You?
Market value analysis offers several benefits to home sellers and buyers:
- By staying updated about the market price, they can make informed decisions about what to quote. Hence, they can effectively quote fair prices.
- Knowing the market value of their houses also helps investors assess the investment potential of that property. Hence, one can compute the ROI or Return On Investment and also derive the estimated rental rate of that property. This is how many houses for rent in Berkeley, are calculated for their rental rate.
- If you want to sell your home, quoting a fair price will help attract potential buyers. Otherwise, a higher price will easily discourage those buyers and seekers. On the other hand, if you quote a lower price, you might incur financial losses.
- Informed homeowners can negotiate deals better and confidently than those who do not have the right idea of the market price.
- Assessment of a property’s market value also helps owners from overpaying property taxes. This is because these taxes are determined based on the market value. Hence, owners can easily know how much tax they should pay.
- Financial institutions assess the price of the house based on its market value, which then may influence the mortgage terms. Correct estimation of the house can help buyers secure appropriate finances based on their needs and preferences.
Wrapping Up
Accurate valuation of the house can serve you plenty of benefits, hence, make sure not to avoid it. We hope that you found the above information useful. For more such valuable blogs, stay tuned to Raj Properties.
Raj Properties is a leading platform that lists several rental properties in the US. From cheap houses for rent in Berkeley to luxurious 5-bedroom houses and apartments, you can find a wide range of properties on this website. Visit and explore.