Factors That Affect Property Value

Jun 08, 2022 • Our Blog
Factors That Affect Property Value

Looking to buy a new home or commercial property? Or perhaps you have something already and you’re wanting to put it up for sale. In either case, you need to be aware of what factors affect real estate property value so you can avoid any surprises (good or bad) and ensure you’re getting the best bang for your buck or not falling victim to poor deals.
In this article, we will look at the top 4 variables that make real estate value rise, fall, and everything in between so that you can accurately figure out what your home/commercial property is worth.

1) The Property’s Condition and Age

Okay, yes, these are technically two factors because they are intricately connected. After all, age typically plays into the property’s condition. The older a building is, the more likely there will be issues that will require renovation and repairs.
While old-styled homes can be beautiful and have an “antique mystique,”  or "character," they usually also come with outdated plumbing or electrical systems– or worse, they may have serious underlying property damage like from a flood or fire that you find out about until it’s too late.
However, there is a flipside because, under the right owner, a decade-old property that’s been well-cared for beats a recently built place that’s poorly constructed. It’s up to you to do your due diligence and make sure it’s an investment that’s worth the price.

2) The Property’s Location

You’re probably familiar with the phrase “location, location, location,” which people typically say when you’re starting a business. But the same applies to property investments and purchases because the location is one of the most important factors in determining a property’s value.
For instance, low-income cities or zip codes will have more affordable prices compared to something that’s in an up-scale, high-end area. An easy way to see this is that a house/property in LA is considerably more in, say, Memphis, TN.

3) The Current Housing Market

Another important factor to be aware of is the current housing market, which itself is affected by a variety of elements. Namely, supply and demand and the current state of the economy. When looking at supply and demand, it’s simple– more supply of available properties will lower the prices and a higher demand for a limited supply will make it higher.
However, depending on how many people are employed, the rate of inflation and various other economic factors will have an impact on property value as well.

4) The Property’s Size

Finally, the last important consideration is the size of the property. In short, you will need to pay more for larger spaces and can save money if you look at somewhere smaller. We feel that is self-explanatory so we won’t go into much detail. Just know that size is one of the most important factors in a property’s value as well.

Final Thoughts

Yes, there are far more variables that play into a property's value, but these four tend to be the most important and are the key ones you should look at when deciding to buy, sell, or invest in your property. Some other things include additions and upgrades, interest rates, and more. Just remember to do as much research and perhaps take on the help of an expert if you need more assistance in figuring out the correct appraisal value for your property. Last but not least, remember that at DRMC, our motto is "Together, we get it done!". Contact one of our expert Loan Consultants at a branch location nearest you.

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