"Six Factors That Determine Your Home's Value" is an engaging and informative podcast that delves into the key elements that influence the worth of a residential property. Hosted by Dennis Day and Judy Gratton of the Edge Group Team, this podcast explores the various factors that contribute to the appraisal and market value of a home.
The topics covered include location, property size, condition and age of the home, economic health of your area, real estate market trends, and price of homes that sell in your neighborhood.
The podcast takes a deep dive into each factor, exploring how it impacts a home's value. Listeners will gain valuable insights into how different elements interact and influence one another, such as how location and nearby amenities can impact property size and desirability, or how market trends and home condition affect appraisal values.
By exploring these six factors comprehensively, listeners will gain a better understanding of the nuances involved in determining a home's value, empowering them to make informed decisions in the real estate market.
"Six Factors That Determine Your Home's Value" is an engaging and informative podcast that delves into the key elements that influence the worth of a residential property. Hosted by Dennis Day and Judy Gratton of the Edge Group Team, this podcast explores the various factors that contribute to the appraisal and market value of a home.
The topics covered include location, property size, condition and age of the home, economic health of your area, real estate market trends, and price of homes that sell in your neighborhood.
The podcast takes a deep dive into each factor, exploring how it impacts a home's value. Listeners will gain valuable insights into how different elements interact and influence one another, such as how location and nearby amenities can impact property size and desirability, or how market trends and home condition affect appraisal values.
By exploring these six factors comprehensively, listeners will gain a better understanding of the nuances involved in determining a home's value, empowering them to make informed decisions in the real estate market.
Heidi Ho good neighbors Welcome back. This is getting your edge how to right size your home and life podcast and hosted by me, Dennis day, the hedge Group team and we're here to give you an edge in all your real estate needs. I'm here with my wonderful co host Judy Gratton. How are you today?
0:31
I'm doing fantastic, Dennis. How are you?
Dennis Day
0:34
I'm doing great. I had a pretty good Father's Day yesterday. Did you spoil your gym?
2
Speaker 2
0:39
I did. My husband. Yep, I did. I spoiled him rotten, especially considering I mean, I cooked him breakfast and dinner and I hate cooking. So I guess you would say as well.
DD
Dennis Day
0:54
Cool. Well, that's really nice to hear so well. Same thing. I had breakfast and a really nice dinner my son came over, they gave me some hiking shorts. And I'm just waiting for some good weather. You know, in the Pacific Northwest. We call it January, because it's cold.
1:13
Warm street there. And we thought maybe we'd miss it, but not.
DD
Dennis Day
1:16
Not anymore. Yeah. Okay.
2
Speaker 2
1:19
Well, it's good to hear you had a wonderful time yesterday. But today, I'm so excited that we're going to be able to discuss one of the most important aspects of residential real estate, and that is the price of homes. It's a topic that so many people are aware of. And we have six factors, going into making a decision on pricing a home that I think homeowners should really know about
DD
Dennis Day
1:46
awesome price, a residential home is influenced by various factors. And today we're going to explore all those key elements, the big ones that have the significant impact. So let's get started. How about number one?
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Speaker 2
2:00
Number one is location, location, location, location, it is the one thing that you cannot change about your home good or bad. It is what it is.
DD
Dennis Day
2:12
Oh, that's right. And location of a home plays a critical role in determining the price of a residential property. You can have two identical homes in different areas, and you're going to see different home values. And so tell us what's so important about location besides the fact that you can't pick up and move it? Well,
2
Speaker 2
2:31
there are several factors such as proximity to amenities, like schools, hospitals, shopping, transportation options, desirable neighborhoods are areas to consider are things like low crime rates, good school districts, close to restaurants again, and shopping. walkability is a huge thing. Now they actually score it. So if walking is important to you, then that is something that you would want to consider or in selling your home. How walkable is it for other people? Because that could determine the price and the interest?
DD
Dennis Day
3:10
So how about your proximity to water?
2
Speaker 2
3:14
Well, I would say your proximity to anything water, any kind of view could be mountains, could be snow, it could be a river or water. People love to be close to the water, especially here in the Northwest. The closer you are if you have a view of the water, if you have a view of the mountains, even a city skyline, those sorts of things of you and particularly will raise the value of your home. And of course, if you're right on the water, that definitely raises the value of your home.
DD
Dennis Day
3:47
Yeah, people love to look out at the outer windows and see beautiful scenery, you know, they do. And it's something I've always wished for.
2
Speaker 2
3:57
One of the things when we're filling in a listing on the multiple listing service that it asks or what is the view and if you don't have much of one, it normally ends up being called territorial.
DD
Dennis Day
4:08
Okay, location is probably our biggest thing really, it is one of the biggest one of the biggest, okay, okay, we've covered location. So another important factor which is number two on our list is the size of the home in the lock correct.
2
Speaker 2
4:22
So, square footage of the home. Again, it depends on what your buyers are looking for. But if you're looking at a residential home that in a residential neighborhood, normally the larger the home within parameters, the more people are going to look at it when you start getting into four and 5000 square foot homes. You're in an entirely different market where you're it's not a middle class home anymore. It is a luxury home and people that are looking for luxury homes are more likely to be looking for the larger square footage. People in a middle class Home or Starter home or downsizing home, they're looking for average square footage, which is roughly, let's say 2500. And below it can go up as high as 3000 square feet,
DD
Dennis Day
5:13
three bedrooms better than two.
2
Speaker 2
5:17
Most times, yes, three bedrooms almost always will make a difference two bedroom homes will have a tendency to sit longer. But again, it's what someone is looking for. So if you have someone downsizing, for instance, they may not want three bedrooms, but frequently people are looking for at least three bedrooms, either because they have children, or they want an office. And let's say there isn't a den included in the home. So three bedrooms plus generally sell for a higher dollar value than a two bedroom home.
DD
Dennis Day
5:51
Yeah, that office space was kind of, you know, a luxury a few years ago, but it really has become a necessity, quite important. There
6:01
are some home now,
DD
Dennis Day
6:03
we see a lot of homes that are in the post war, World War Two, built in the 50s, and so forth. And there's a lot of three bedroom, one bath, 1200 1500 square feet out there that was
2
Speaker 2
6:15
done. Because after World War Two, you had a lot of veterans coming back to start with families to start their lives because they had all gone into the war at such a young age. And there was a rush for housing. And so like areas, we have Mountlake Terrace, those homes went up really fast. A lot of them were built with cement blocks because it was easier to build. And they were three bedroom, one bath, and they still exist today.
DD
Dennis Day
6:45
That was kind of the standard starter home it was and now they're a little harder to sell because everybody wants at least 1.75 bath
2
Speaker 2
6:56
and 1.75 means you've got a bathtub in one bathroom and you have a shower in the other bath. And that seems to be sufficient for first time homebuyers. They seem to be relatively happy with that. But people love bathrooms.
DD
Dennis Day
7:12
All right, so we've got location and size of the home and lot. And then another one is the age and the condition of the home new homes command a premium price. People like to have that move in ready situation with a new home. And they
2
Speaker 2
7:29
oftentimes they have a warranty that comes from the builder, and also from the companies that provided the products that went into the home. So that's always something that someone is looking for. We have a lot of people who are like I want a new color. And it's like well, could we show you some of the older homes that have been remodeled. Something that people don't realize, especially back even in the 60s, the quality of the wood that went into the framing on home's was much better than what we have today. I haven't personally seen it. But I've been told that frequently there were no knots in the wood because they had a they had more to choose from at that point in time when they were building homes. So the actual structure itself is made better. If and if it's been updated, specifically, the things that you want to look for. I mean, it's nice if they've remodeled your kitchen and your bathroom. But does it have a new roof? What is the siding look like? And frequently deciding in those older homes is cedar and it lasts a long time. So what is the siding? What kind of condition is that in? What is the electrical look like? If it is knob and tube electrical, you can't get insurance anymore for homes that have that. And so if you have knob and tube electrical, you may be looking at needing to change out your electrical before you sell your home because people can't get it insured anymore. There isn't much of it left. So updated electrical updated plumbing because there were lead pipes or iron pipes that may be rusted out. So those are those are high ticket items that if those had been done, you can always redo a kitchen or a bathroom. It's nice if they look good, but when I'm taking a buyer in to look at a home, those things can be changed much more easily than the things that actually make the home sound like plumbing, electrical roofs, furnaces, things like
DD
Dennis Day
9:42
that. Okay. So maintain the furnace, maintain it,
2
Speaker 2
9:46
you should have it cleaned every year. You should definitely have a cleaning service before you put it on the market. Because every time anyone does an inspection I get the inspector always comes back When the furnace needs to be service, and nobody does it, and it's a very inexpensive thing to do, and a really good way to take care of your furnace and keep it clean, so so that runs longer. One of
DD
Dennis Day
10:11
the things that happens around the Pacific Northwest is Moss, it rains it, you just can't help it moss is here and you have to clean it off. I mean, there are services who will do it for you, they will put on a coating that will make it repel the moss, and so forth. But I've seen this around all the time here that people are not maintaining the roof. And I've seen trees growing from the moss or from the gutters,
2
Speaker 2
10:39
my gutters are terrible at my house. And I actually had a tree grow little sprout growing out of my gutter, even though I have them cleaned out twice a year, but you need to stay on top of that, please, please, please do not power wash your composition, do not it will take the grain off the roof, it will not last as long, you'll have to replace it sooner, what you do is you put the chemical, I've heard even tide laundry soap will work on top of the moss, which kills it, and then either go up there and pick it off, sweep it off, let the wind blow it off. But do not power wash your roof. I have a neighbor across the street. And every year, I mean, we got our roofs put on at the very same time. And every year, he was up there power of washing his roof. And he sold his house last year and they ended up putting a new roof on the very next year. So it's an expense. It's about $18,000 for say, a 23 2400 square foot home with a roof.
DD
Dennis Day
11:45
Yeah, it's an expensive thing to do. And the poorly maintain home is really kind of sad, because this is your biggest investment you will ever make probably for most of us. And selling a home that hasn't been maintained as is, is you're just cannot command the price that a well maintained, updated home. Well.
2
Speaker 2
12:08
I see a lot. And it's it's sad. And this is why we're doing this podcast on downsizing to hopefully help people make decisions early enough where they still can make a decision to get things fixed, and then sell the home. Oftentimes, I see people get into a situation where they can't afford to fix things anymore. They're now on a fixed income, the home has started to deteriorate, there's moss, the glass in the window, the seals break the pipes get rusty, the sewer lines break major things and they can't afford to repair them. And now they have a home that they need to sell that's in distressed physician and they will they will not make as much money on that home. Because the home is distressed. But sometimes you need to consider if you're at that point, and the home has issues, what is it going to cost you to make those repairs to bring it up to a place where it can get top dollar because to get top dollar, you're going to need to have the newer roof, the newer furnace, the better Windows Suhler and or septic system being in good condition, electrical panels being good. And then the inside is going to have to look as good as it can be. The more remodeled it is, the higher the price is. But sometimes it's not worth doing the work because it will you will not recoup the cost.
DD
Dennis Day
13:35
Talk about that at the end of our episode here. Okay, let's move on to number four. The economic health of our region has a major effect on the price of homes and home values around here. If you live in an area where the economy is stable and growing, people are moving more people are moving in or moving out, your home values are going to probably stay or grow, right. A prosperous economy, low unemployment, high demand for homes means your home values will increase. On the other hand, if you're living in an area where people are moving out the mill, the factory has closed and there's more houses than there is people your home values are going to drop. So
2
Speaker 2
14:23
what I tell people when I do my analysis for them on their home is that this is a snapshot of the value of your home today. And every time a home sells in your neighborhood or near you it's going to change the value of your home. And so you should try and get someone to give you a report frequently or set you have to receive a monthly report so you stay on top of what the values are in your neighborhood. And they are in 2006 I think when the economy crashed homes lost at least have their value. And at that time, the majority of sales that we had were short sales, it was a tragic sad situation a short sale is you owe the bank more money than the home will sell. And most of our sales were that are foreclosures, because at that point in time, so many people were upside down in their homes. And some people just chose to walk away and looked at the home as a commodity versus their home. And they just left and were foreclosed on the economy definitely is tied to the value of
DD
Dennis Day
15:33
one of the big ones is the overall market conditions in your area.
2
Speaker 2
15:38
And they vary depending on where you live anywhere in the country. And again, it a lot of it is tied to employment, but it can be tied to, you know, the crime rate, if the crime rate changes in an area that is definitely going to affect the price of your home, because you're going to have to want people who are willing to take the risk to live there. That's why it's so important for citizens to be involved in their community and try and stay on top of things like that with within the police department and the city council and things like that.
DD
Dennis Day
16:10
So we saw this home values can be really dependent on National Economics. So a lower interest rate we had this few years ago was lower interest rate because we wanted to prop up the economy. And all of a sudden everybody became a buyer and wanted to get in. But what did that do? Well,
2
Speaker 2
16:31
in addition to that, a lot of people refinance their mortgage, because interest rates were four or five, three, they got down into the twos briefly. And lenders were having a heyday contacting their previous clients getting them to refinance. In fact, my husband, who's also in real estate with us told me this morning, and I can't remember the exact number he told me, but a large majority of Americans have mortgage rates now that are at 5% or below. And that's kind of a problem, when as a new buyer, or you're thinking of moving and interest rates are in the high sixes sevens, that makes a huge difference in the decision and the buying power that people have. So a lot of people are choosing to stay in their homes because the interest rates are just too good to walk away from.
DD
Dennis Day
17:23
Yeah, and that means that there are not that many homes to sell. We have a really low inventory of homes for sale, which does
2
Speaker 2
17:33
drives the value of the homes. Yeah, so if a home is priced right, and it needs to be priced right on day one, because buyers have access to the information now. They can go on Zillow, they can go on Redfin, they can go on any number of sites, and they can see what homes around your home have sold for. And so when they walk into your home, they already have a pretty good idea of the value of your home, and whether or not it's going to be interesting to them. What you try and develop as a realtor is a sense of urgency, it's priced right, it looks great, and you better buy it before somebody else does. That happens when you have a shortage of inventory and it's priced right. If it's too high, it just sits there and eventually people go what's wrong with it? Why is it been on the market so long, you end up losing more money in the long run.
DD
Dennis Day
18:25
And last but not least is the comparable sales in your neighborhood. And as you mentioned, every time a home sells near you, your home value changes, strong sales and rising prices and the homes around you is going to bring the value up and vice versa.
2
Speaker 2
18:44
And so you need to stay on top of that. You should really be informed what the value of your home is, and it's not your tax. It's not what the tax man says on this word. Normally, most of the time although right now a few people are upset because they're seeing higher tax rates than they think they should be getting. But they were tied to last year sales. Next year, the value will probably go down because this year sales have gone down a little bit. However, it's we're in a weird market because even though we have low inventory, we still have high interest rates. But like we said if the home is priced right, people are still bidding them up.
DD
Dennis Day
19:24
Now realtors and computer algorithms use comparable wholesales and we call that comps and these comps are used to create a range for when value of your home. You know you don't want to say it's worth the this exact amount of money. You know there's a range depending on things. But those computer algorithms don't see inside your house. They haven't seen whether you've you've updated this or that they haven't seen if your house is in poor condition. So they're just going by property records and The public documents, whereas a realtor like us could come in, we could actually look at your home correct, and give you a much more accurate value range. And if
2
Speaker 2
20:13
you're, if you're thinking that you want to move in the near future, and there's work to be done, the other thing that we can do, because I've had people say, Oh, no, no, no, I need to put the granite countertops in before I sell my home. And it's like, no, you don't, why would you put the granite countertops in that you've always wanted for someone else, they may not want them because granite really isn't the thing anymore. Now in sports, sometimes it doesn't make sense, because the value may not, you may not be able to recoup it. Whereas if the roof is shot, I'm sorry, you better plan on getting a new roof. Many lenders when they send an appraiser out, and the appraisal is different than the inspector, the inspector. Either you hire an inspector and do a pre inspection as the seller and so they're working for you, or the buyer. heis hires the inspector and they're working for the buyer, the appraiser is working for the lender, and he comes out and looks at the home to make a determination if the home is worth the amount that the loan is. And the way a contract works it has financing in it is that the lender will loan like let's say that the buyer was putting 20% down, the lender would loan 80% of the agreed upon contract price, or the appraised value, whichever is lower. So your real estate agent needs to make sure that they don't put you in a position where you're overpriced for a loan, and then suddenly, the lender, the appraisal comes in low, the lender says we're not going to loan will loan 80% of the appraised value and there's, say 10 or $15,000 sitting on the table. Are you going to eat it? Or is the buyer going to pay it? These are things that need to be discussed up front before you end up under contract.
DD
Dennis Day
22:09
So that's our six factors. Let's review them. We've got location, we got size of the home and its lot age and condition of the home the economic conditions of the area that you live in the the market conditions and the comparable sales in your neighborhood, all these things can really have a big effect on your home values,
2
Speaker 2
22:31
they absolutely can. And it's really a good idea to have someone with experience come in and help you determine what that true value is that you can actually sell the home for and then move on and do what you want to do. There's a lot that goes into that we
DD
Dennis Day
22:47
kind of mentioned that the right things to do to your home, particularly if you're close to selling our next podcast will be all about that topic, the things that you should do if you're getting close to selling and the things that will not return the price of what you put into it. So that's all we hope to see you next week. That's for the it for getting your edge how to right size your home and life podcast. And we hope you enjoyed this episode and found it useful. If you have any questions give us an email at answers at edge group real estate services.com and we can answer your questions every time you call. It's just free. There's just advice. There is no obligation. Thanks for joining me, Judy.
23:31
Thank you Dennis and goodbye.
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Summary
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Introduction. (0:10)
Location Location Location Location location. (1:58)
The square footage of the home. (4:22)
The importance of office space. (5:51)
Things to look for in a new home. (7:38)
How much does it cost to buy a house? (11:36)
Economic health of the region and home values. (13:35)
Why it’s so important to be involved in your community. (15:57)
How low inventory drives the value of homes. (17:28)
How to determine the true value of your home? (19:36)
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