6 Factors That Influence Your Home’s Value

Do You Know The Factors That Influence Your Home’s Value?

Factors That Influence Your Home Value (1)

During a discussion recently with a homeowner, I was asked: “what can I do to increase the value of my home”? Keep in mind that I had called them to set up an appointment for an appraisal to be done that week. They wanted to know what could be done before I came out to help their value. The short answer was “nothing”.

Short of picking up around the house and making it more presentable there is nothing that can be done short term to help the value of your home. In reality, housekeeping doesn’t have a big impact on the value either since it has nothing to do with the structure of the home, which is what the appraiser will really be looking at.

Today I thought I would share with you 5 factors that influence your home’s value. These are things that the appraiser will be considering when they perform an appraisal on your home and that has a direct impact on its market value. I’d like your thoughts so leave a comment below.

1) Square footage (gross living area)- When everything else is the same in a property the home thatTom Horn Birmingham Alabama house measuring service is larger will always sell for more. Most people understand this but what they don’t understand is that the contributory value of each additional square foot of living space will not contribute the same amount of value indefinitely.

My friend, Ryan Lundquist, an appraiser in Sacramento, CA explains this concept perfectly with his Starbucks analogy. I highly recommend reading his entire article but what he basically explains is that the more coffee you buy the cheaper it is per ounce.

The same is true for your home. The more square footage you buy the lower the price per square foot. So if two homes sell, one being 2,000 sf and the other being 3,000 sf, they will not sell for the same amount per square foot. This is because of economies of scale, which states that with each additional square foot the contributory value per unit decreases. The bottom line is that the larger the home the more it will sell for.

2) Quality- Quality of construction can have a large impact on the value of your home. A home that is built with better quality workmanship and materials will typically bring a higher price.

During an appraisal inspection, the appraiser will collect information about your house regarding what materials it is constructed of in addition to its quality. There is nothing you can do about this short-term (like 2 days before the appraiser comes out) but it is something to consider long-term. Decisions on the quality can be made during construction or at a later date, possibly when updating or renovation takes place.

3) Condition- The condition of your home is something you have total control over. By maintaining a house that is in tip-top shape you can guarantee that your home will appraise for more.

An appraiser will take note of the condition of your home and provide a quality rating, which is then compared to the condition of the comparable sales. If a comp is inferior in condition to the subject then a positive adjustment will be made to the sale. The opposite is also true with a comp that is superior to the subject because a negative adjustment will be made.

The best comp will be one that reflects a similar condition to the subject. A condition adjustment is difficult to estimate so bracketing the condition of the subject when choosing comps is best.

4) Recent Comparables- One of the most important things to influence the value of your home is the sales comparables. Some will say this is the most important, especially for an older home.

By looking at what other similar homes have recently sold for the appraiser can narrow down the range the subject will probably fall in. After adjusting for differences such as square footage and additional features the range can be narrowed down even more and a final value reconciled.

5) Location- The old saying of location, location, location is true for a reason. Two homes that are equal in all respects can sell for quite a different price depending on where they are located.

Among the important items included in the location are school systems. Most real estate markets are influenced by the quality of schools. This is why comparable selection should include school systems in their search criteria. Other things such as crime rates and distance to employment centers can also affect values and should be considered.

6) Floor plan/layout- Most newer homes do not have negative issues with their floor plan, however, some older homes may exhibit functional problems. Functional issues may arise when it is necessary to pass through a bedroom to get to another room.

Another form of inadequacy in floor plans can occur when the plan does not meet the expectations of the area. For example, if homes typically have 3-4 bedrooms but the subject property only has 1 or 2 then this can affect its market value.

The maximum value of a property will be realized when it “fits” into the norms of the area. This is something you want to keep in mind when looking for a home to buy. If you run across a home like this you will want to keep in mind that it may not appraise for top dollar because it is different and may not appeal to the majority of buyers.


As you can see there are a lot of factors that influence your home’s value. If you have any questions after reading this feel free to contact me as I’m always here to help. As always, thanks for reading.

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  1. Great stuff Tom. Thank you for the shoutout too. That was unexpected. Layout is definitely a big factor in value. Its easy to get distracted by just square footage, but layout really matters. These days a house with an open concept might be far more appealing than a boxy home from the 60s.

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