8 Critical Factors That Influence a Home’s Value

8 Critical Factors That Influence a Home’s Value

For every homeowner, his/her house is commonly their greatest asset of their lifetime. Commonly it is also one of the greatest investments a person makes. So while selling your house, most of us would be seeking ways to get the maximum profit from the deal. One of the best ways to do this is to increase the value of the house. When you are increasing the value of the house, you are enhancing or highlighting the best features of the house to grab the attention of the potential buyer. While increasing the value of the house, you must understand that the value of the house is based on certain factors, and these factors are directly influenced by the aspects for which a future buyer is willing to pay and might be interested in your home. However, every potential buyer in the market has a different perspective, so how will you know which are the important factors which influence the value of the house? If you are not sure about it, do not worry, we have got you covered. We will be sharing the knowledgeable tips by expert real estate agents that cover the eight critical factors that influence the resale value of a house.    

1: The Location of the House

This is one of the most important factors that play a vital role in influencing the market value of any house. In this factor, you do not have to include your personal perspective, for instance, your house may be located in a suburb which may be ideal for you — it may be near to your job location, near the kid’s school, or near to your relative’s house. Keep in mind, these factors mentioned do not mean that it will be ideal for prospective home seekers as well. The value of the house is based on the location and this value would be assigned by the appraisers. There are three major aspects that will let you analyze the value of the house:  

  1. Your house must be located in an area where there are several local schools available for kids.

  2. The house must be in a prime location that is nearby to an area that has multiple job opportunities.

  3. Mass transport systems for local commutes must be nearby.

  4. The house must be located in an area that is nearby to shopping centers, entertainment centers as well as different sorts of recreational centers.

If your house is located in such a prime region, then the market value of the house can rise to the highest level. Potential buyers take into consideration these basic factors before selecting the house and paying the price for it. If your house is in a remote location where there are no schools or proper alternatives for commute, the market value would be extremely low. Such houses would take a longer time to attract the right buyers. Besides this, if the house is located around the highway or utility lines, then it will also impact the market value of the house. Generally, people need all these facilities in the neighborhood, so residing in the area would become easier. People do not have to travel miles for just buying few things or dropping the kids to school.   So location is one of the crucial factors that will influence a home's value of the house. It will also help you understand whether you would be getting the right purchasers who are ready to pay the asking price or not.  

2: The Size or Usable Space of the House

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The second important factor that influences the value of a house is the square footage. To be accurate, the size of the house refers to the usable square footage of the house. When you have a bigger house, it will definitely impact the asking price of the house or the market value. If your house features a large garden, parking for multiple cars, a fenced backyard, basement/cellars, multiple bedrooms, multiple bathrooms, large living area, a spacious kitchen, etc then the usable space of the house would be more when compared to a smaller house with smaller rooms and no extra space for garden or parking. The value per square foot of a home that is spacious, the value of the house is definitely higher than the house with less space. If your buyers have a smaller amount of people living in the house and are looking for a smaller house, then they can opt for the smaller or less spacious house. But if they have more people living with them and looking for a large house, then they will definitely go for the bigger houses.

So while you are looking forward to increasing the value of the house, make sure that the livable space would be considered adequate by the potential buyers and appraisers. The most important aspect when it comes to using space includes the bedrooms and bathrooms. According to the appraisers, the bathrooms and the bedrooms are the features of a home that command the highest home value. So if you have several bedrooms and bathrooms in the house, the market value of a home would be more. Note: These things are subjected to real estate market changes and maybe differ for different regions.  

3: The Age of the House

Another critical factor that influences the home value of a home is the age and condition of the house. A newly built house would definitely have a higher home value than a house that is over 15 or 20 years old. The new house has all the new features, and it would require less maintenance as compared to the older house. The new house would remain stronger for a longer period, whereas an old house may not have strong structural integrity and may require frequent repair. According to the appraisers of the house, the new house will be having a higher home value.

The actual factors behind this are all the critical features of the house such as plumbing, wiring, electrical, the roofing of the house, and a wide range of different appliances. You would agree that the newer ones are less likely to break down because of the age and condition. They also would be more cost-effective.

For instance, when the house is new, there would be no issue with the siding and roofing repair. These things come with at least 15 to 20 years of warranty. So you will not have to worry about such things for the next 20 years. Just imagine if instead of a new house, someone buys an old house, they will have to replace the roofs, home appliances, siding, and sometimes even the wiring within a short time.  

4: The Condition of the House

Besides the age of the house, the condition of the house also plays a major role in influencing the market value of the house. It might happen to be that your house is old, but if you have kept it well-maintained or have made useful changes before selling the house, then you can increase the value of the house. For instance, you would have changed the old roofing system and replaced it with a new one. You can replace the old rugs, carpet, and flooring to enhance the appearance and look of the living area, applying a fresh coat of paint to the doors and windows, inspecting and locating the faulty wirings in the entire house and replacing them, renovating the bathrooms and bedrooms, transforming the attic/basement/cellar into an extra room and making useful renovations in the kitchen. When you are working on all these things you are improving the condition of the home. It will increase the market value of a home.

Sometimes it might happen that the house is new, but it is not kept well-maintained. Such houses would not be considered good by the house appraisers or potential buyers. Consequently, the real estate value of the house will decrease and thus have a negative impact on the home's value.  

5: The Existing Status of the Local Market

The existing status of the market is considered the most critical factor that will have a major impact on the value of the house. The real estate market has a tendency of undergoing rapid changes within a short period. The market can be in three different phases — it is in the seller’s market, buyer’s market or it can be neutral. If the market is a seller’s market (it will be in the favor of the sellers), then the prices of the house can go to the maximum level. If you want to sell the house, then this would be the right time. You can take advantage of the seller’s market to get profitable deals. The seller’s market will have a positive influence on the home's value.  

However, when the housing market is in the favor of buyers, then it is called a buyer’s market. In such situations, the supply is more, and the demand is less. In simple words, the number of houses in the market would be more than compared to the number of buyers. So the buyers would have the advantage of choosing the best house and also get it at a low price. This market condition will have negative factors that influence a home's value. If the property is not in the favor of the sellers, the condition, age, and location of the house will not have any huge influence on the buyer's decision in terms of preference. So the status of the market is one of the most critical factors.  

Even though your house is in excellent condition, if the local market is not favorable, you couldn’t increase the value of your home.  

Besides having a great influence on the market value of your home, the status of the housing market will also be the deciding factor in how long it would take to get your house sold. To understand this, you can refer to the DOM — date of the market. This feature provides information on how long the homes have been listed on the MLS and when the actual sale takes place, or for how long it has not been getting potential buyers. If the house has been listed and has been on the market for a long period, then the buyers would perceive it negatively and would not like to buy it or even consider it.  

6: Interest Rates Prevailing in the Market

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You might be wondering how interest rates can influence the real estate value of your home. Interest rates are of two different types — long-term interest rates and short-term interest rates. You must understand that when the short-term interest rate increases, it will help you in enhancing your savings but it will also increase the debt and make mortgages appear more expensive. When the debt is increasing, you won’t be able to find yourself in a comfortable position to buy the house. So it is not good for the sellers. When the buyers are not in the condition to buy the house, they will not be able to find potential buyers for the house.  

7: Considering the House Updates and Upgrades

Whether your house is old or new, if you are renovating it or upgrading it, then you will definitely increase the market value of your home. If you feel that the house looks outdated as compared to modern times, then it is better to upgrade it with modern home appliances and integrate smart technology gadgets (smoke alarm, fire alarm, or burglar alarm). These factors play an important role and can have a great impact on the value of a home.  

8: House Comparison

When you are trying to sell the property, it will definitely be compared with the other houses in the neighborhood. Based on this comparison, the appraiser and buyers will determine whether the asking price of the house seems valid or not.  


The aforementioned points are the most important or the critical factors that influence the property value of a house. You must factor in all these aspects before coming up with a final price for your house. You should be cautious of not pricing too low or pricing too high. If you consider these points, you can easily analyze how much time would be needed or how long it would take to get you the right buyers.

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