Why Does One Home Sell for More Than Another?
In a neighborhood of similar homes, why does one sell for a higher price than another? That’s the question that’s teased buyers and sellers for ages, but the answer is simple. Every home is unique – as unique as its owners. Every building site or lot is unique in terms of location, size, topography, number of trees, views, what the lot backs up to, and ease of buildability.
When a seller chooses to sell, they determine an asking price as close as possible to the price at which they believe the home will sell - based on previous sales of similar homes, in similar neighborhoods. Your Berkshire Hathaway HomeServices network professional will provide you comparable market analysis so that you can compare the home you want to buy or sell against other homes currently on the market or those that have recently sold. You’ll look at the size, style, age of the homes, schools, whether the home is updated, and other criteria.
Other important criteria are:
Number of bedrooms and baths
Features and finishes
Location – The closer a home is to jobs, parks, transportation, schools, and community services, the more desirable it’s considered to be. Also, exclusive features such as gated or guarded access will make a location more sought after.
Size – Large square footage impacts prices and home values because they’re built using more materials and offer more features and amenities. Larger lot sizes mean more privacy.
Number of bedrooms and baths – Over time, median homes have grown larger. Decades ago, household members shared bedrooms and baths without complaint, but today, families want more privacy. The median home purchased today is a three-bedroom, two-bath home, but it’s quickly evolving to a four- bedroom, three-bath home.
Features and finishes – Amenities such as outdoor kitchens and spa baths make a home more luxurious. A home finished with hardwood floors and granite countertops is going to cost more than a home with carpet and laminate countertops.
Condition – The closer a home is to new construction, the more it will retain its value. It’s perceived as more modern, up to date, and perhaps safer. Homes that are not updated or in poor repair sell for less. It’s a good idea for homeowners to keep their homes updated and in top repair to maximize their equity when it comes time to sell.
Curb appeal – From the street, the home looks clean, fresh, and inviting. Fresh landscaping and flowers won’t change the size or location, but they certainly add charm.
When a home is sold, it means the home seller and homebuyer not only agreed to a price, but they also established the current market value of that home – what a willing buyer will pay and what a willing seller will accept. From there, other similar homes are benchmarked, but other factors come into play, such as how much money a lender is willing to loan to the homebuyer. When two homes are identical in the same neighborhood, such as a condominium or tract home, a higher price may come to down to something as simple as the amount of light the home gets or personal taste influenced by paint colors and décor.
Is it worth it to pay a little more to get a better view, a more modern kitchen, or something else that you value? Determining price and value is not an exact science, even among bank appraisers whose job it is to determine fair market value, but if you buy wisely, keep your home updated and in good repair, and occupy it long enough to build equity, you should recoup any investment you make when you sell.