Real estate values are determined by the market price per square foot of nearby properties similar in size, condition and amenities.
The higher the square footage of a house, the lower the price per square foot will be.
The more similar houses within a neighborhood are, the more consistent their values will be. Values in neighborhoods of older homes tend to be more variable because some homes will be updated, and others not.
The value of the most expensive homes in a neighborhood will tend to be decreased by surrounding homes.
The values of the smallest, least expensive homes in a neighborhood will tend to be increased by the pricing of surrounding homes.”
New homes generally do not appreciate for the first several years.
Click here to learn more about pricing new homes vs. existing homes.
Pricing Your Premiums & Upgrades
Premium Lots. When a lot is oversized or has special amenities, the home is worth more. To price a home with a premium lot, first determine what it would be worth if the lot were a standard lot based on price per sq ft. Then add the difference in lot value.
Garage Conversions. Converting a garage to living space generally does not increase the value of the home. To price a home with a garage conversion, first deduct the square footage of the converted space, then multiply the remaining square footage by the appropriate price per square foot for homes of similar size and condition in the area. The loss of value of not having a garage and the added value of the additional living space is a wash.
Swimming Pools. A pool that costs $30,000 to $45,000 to put in makes the average house worth $10,000 to $15,000 more. If you want a pool, buy a house that has one. Don’t add a pool unless you plan to be in the house long enough to get your enjoyment out of it, because you’re not getting your money out of it when you sell. Calculate a maximum of $15,000 of added home value for the pool, regardless of what it cost you to put it in.
Avoid non-relevant factors. Don’t base pricing decisions on what you want or need or what the home cost you. Buyers don’t care how much you paid, or what the remodel cost you, or how much of a down payment you need for your new home. Value is determined by the market.