Homes are valued and priced by the livable square feet they contain, and the more livable square feet, the better, says Benjamin Ross, a Realtor and real estate investor based in Corpus Christi, Texas. Adding a bathroom, a great room or another needed space to a home can increase function and add value.
Physical aspects of the property, such as poor curb appeal due to yard maintenance or unattractive paint jobs, as well as interior aesthetics like outdated kitchens and bathrooms, can also decrease a home's value.
1. Prices of Comparable Properties. Comparable home sales in the area will influence a home's listing price.
Property Location
The three most important words in real estate are location, location and location. And with California that principle is proven again and again. As mentioned earlier, locations near urban centers, jobs, and amenities have the highest demand and result in the highest valuations.
Primary Suite Addition
Adding a primary suite that includes a large primary bathroom and walk-in closet is not only a functional and smart choice for day-to-day living, it's a good investment. This type of addition brings, on average, a 63% return.
Don't expect a dollar-for-dollar return
However, big-ticket items, such as pools, major kitchen and bath remodels and extensive landscaping undertaken for the sole reason of adding value might not bring the return you hoped for.
Crime Rates. Safety is a huge concern for homeowners. High crime rates in a neighborhood can lead to decreased property value as potential buyers and tenants seek safer alternatives.
Higher Prices: Increased demand and limited supply often drive up home prices, as buyers are willing to pay more to secure a property. Quick Sales: Homes tend to sell quickly, often receiving multiple offers and spending less time on the market.
The most overvalued markets to purchase a home tend to be located in high-priced vacation home markets in Hawaii, in both coastal and inland California markets, Seattle and New York City, as well as still-competitive “Zoomtowns,” including Greeley and Fort Collins in Colorado and Boise, Idaho.
Higher Resale Value: Now, for the numbers game—new flooring can boost your home's resale value. Buyers often favor homes with updated, durable floors because it's one less thing they'll have to tackle post-purchase. Hardwood, in particular, offers a significant return on investment.
The exterior of your home is the first thing potential buyers notice. Neglected landscaping, peeling paint, or a damaged roof can significantly reduce curb appeal and overall value. Regular maintenance such as lawn care, painting, and roof inspections are essential to maintain your home's exterior appeal.
Livable space is what is most important to buyers and appraisers. Bedrooms and bathrooms are most highly valued, so the more beds and baths your home offers, the more your home is generally worth.
Inexpensive value-adding projects include deep cleaning and decluttering. Light home improvement projects include pressure washing siding or the driveway area, repainting interior and exterior walls, updating fixtures, and tidying up the yard.
Things to consider when extending your property
Home improvements that add value to your home include converting the attic and carrying out a garage conversion. According to Zoopla, a loft conversion, kitchen redesign, off-street parking and a garage conversion increase the sale price of the typical home the most.
Demand/supply. The theory of supply and demand states that everything's value rises as its demand rises. With a stable demand, values grow as supplies fall or as long as supply decreases faster than demand.
Physical depreciation is directly related to the house's wear and tear, which naturally happens from everyday use. If the house contains obsolete technology, like outdated electric and plumbing systems, this also contributes to the house's value decline.
However, after 30 years, the depreciation rate increases significantly when the age is measured with the effective age. For a property built more than 30 years ago with an effective age of 1 year, its value will increase over a few years and decrease around an effective age of 15.