When considering what adds value to a property, there are many factors to take into account. Location, size, condition, amenities, and market conditions all play a role in determining a property’s value. Understanding what home buyers are looking for and how different features impact the market value of a home can help sellers price their property appropriately and make smart investments that will maximize their return.
Location
One of the most important factors determining a property’s value is its location. The old real estate maxim “location, location, location” rings true for good reason. Properties located in desirable areas near amenities like good schools, parks, public transportation, shopping, dining, and entertainment often command higher prices. Prime locations will attract more potential buyers and push up demand. Rural properties or homes in less sought-after neighborhoods will likely have lower values simply due to their location.
Some key factors home buyers consider regarding a property’s location include:
- School district ratings – Properties zoned for top-ranked school districts can have values 10-20% higher.
- Commute time – Homes with easy access to major highways and close proximity to major employment hubs are preferable.
- Crime rates – Low crime rates make an area more desirable.
- Amenities – Parks, restaurants, shops, entertainment nearby are a plus.
- Public services – Quality of police, fire department, hospitals, waste removal also matter.
While location is not something that can necessarily be changed, sellers can highlight desirable features near their property to attract buyers.
Size
Larger homes with more living space typically have higher values than smaller comparable homes. Square footage is often a proxy for size and an important factor determining value. Number of bedrooms and bathrooms also play a role, with more commanding higher prices. Other considerations include:
- Square footage of the home itself.
- Number of bedrooms and bathrooms.
- Size and layout of the kitchen.
- Presence of finished basement/attic adding living space.
- Size of backyard and outdoor space.
Home owners looking to increase their home’s value with an addition, basement remodel, attic conversion or other means of increasing square footage can often recoup over 70% of that investment in added equity.
Condition
A property in move-in ready condition with updated features is inherently more valuable than one needing major repairs and renovation. Buyers want a home they can simply move into without having to invest large sums right away in upgrades or fix problems left unattended by the previous owners. Factors impacting a home’s condition include:
- Age of roof, HVAC, appliances, windows etc.
- Fresh interior and exterior paint and flooring.
- Updated kitchens and bathrooms.
- Yard maintenance and landscaping.
- Absence of major deferred maintenance issues or damage.
Making strategic renovations and keeping up with maintenance can allow sellers to list their home for more. Or they may recoup the cost of improvements in the sale price. Cosmetic changes like new carpets and paint generally have the highest ROI.
Amenities
Today’s buyers have high expectations when it comes to amenities. Special features like ensuite bathrooms, media rooms, and luxury kitchens can boost a home’s desirability. Other popular amenities include:
- Swimming pools.
- Spas and hot tubs.
- Outdoor kitchens.
- Home gyms.
- Home offices.
- Wine cellars.
- Saunas.
- WiFi and high-tech features like smart home automation.
Upscale finishes like granite countertops, hardwood floors, and high-end appliances also add value. Fireplaces, ample storage space, garage space, and yard features like decking and patios increase desirability as well. Adding the types of amenities buyers in a given market seek can help maximize a home’s value.
Market Conditions
Ultimately broader economic factors and conditions in the local housing market also influence what a property is worth at any given time. When the market is hot and inventory low, prices get bid up in a seller’s market. In cooler markets with excessive inventory, buyers regain leverage in negotiating prices down.
Economic growth, low interest rates, low unemployment, and high consumer confidence contribute to active housing markets and higher prices. Factors like mortgage rates, building costs and general inflation also impact values from one market cycle to the next. monitoring market trends allows sellers to accurately position their asking price.
How Different Features Impact Home Values
To better understand how certain features impact home values, below is a table with average ROI percentages according to Remodeling Magazine’s Cost vs. Value report:
| Improvement | Average ROI |
|---|---|
| New roof | 64.0% |
| New vinyl windows | 75.6% |
| New steel entry door | 82.4% |
| New garage door | 87.2% |
| Deck addition (wood) | 75.6% |
| Minor kitchen remodel | 80.5% |
| Major kitchen remodel | 68.4% |
| Bathroom remodel | 63.8% |
| Attic bedroom | 70.3% |
| Basement remodel | 70.0% |
This data represents national averages. ROI can vary significantly by market and other individual factors. But it gives a general benchmark for what popular projects tend to recoup in added home value.
Typical Features Buyers Are Willing to Pay More For
In addition to the major factors covered above, here is an overview of some other typical features buyers are willing to pay a premium for:
| Feature | Added Value |
|---|---|
| Walk-in pantry | +$4,000 |
| Quartz kitchen countertops | +$3,500 |
| Stainless steel appliances | +$2,500 |
| Luxury vinyl plank flooring | +$2,000 |
| Tankless water heater | +$1,500 |
| Smart home features | +$3,000 |
| Built-in speakers | +$1,500 |
| Security system | +$1,000 |
| Entryway closet/mudroom | +$1,000 |
| High ceiling (9+ ft) | +$500 per foot |
This gives a sample of features that buyers have shown a willingness to pay extra for based on survey data and sales comparisons. Individual preferences will vary.
How Staging Can Add Value
Properly staging a home before listing it can significantly increase its perceived value and sale price. Staging makes a home look its best by:
- Decluttering to make rooms look larger.
- Making cosmetic improvements like fresh paint and flooring.
- Upgrading fixtures and hardware for a modern look.
- Rearranging furnishings to highlight best features.
- Enhancing curb appeal with landscaping and exterior touches.
Data from the National Association of Realtors shows staged homes sell for 1-10% more on average:
| Home Price Range | Premium from Staging |
|---|---|
| <$200,000 | 1-5% |
| $200,000-$500,000 | 2-10% |
| $500,000-$900,000 | 4-10% |
| >$1 million | 4-6% |
A moderate $1,000-$3,000 investment in staging can yield thousands more in the final sale price. Decluttering, paint, furnishings, and landscaping are key areas to focus staging efforts.
Conclusion
Many factors influence what a given property is worth. While location and market conditions are fixed, sellers can make smart upgrades and leverage staging to maximize value. Focusing on the improvements buyers find most appealing can translate directly into a higher listing price and quicker sale. By understanding what adds value to a home, sellers can make data-driven decisions that get them the best price possible.
