Whether you’re buying a home or selling one, there are real estate terms that are vital for your chances of success: market value and appraised value. Although these two may be confused because of their similar sound, they are pretty distinct in their meaning and the factors that determine them. Let’s examine them and see how they differ.
What is Market Value?
What is referred to as the market value is actually what the buyer is willing to pay for your home in the current market. It’s determined by current demand and the property’s location. However, it can also be influenced by the prices of houses similar to yours in the area.
Factors That Affect Market Value
Location
Location is one of the most significant factors determining the market value of a home. Homes located in a tranquil, well-maintained neighborhood with reputable schools, public transportation, low crime rates, and nearby stores and parks will attract more buyers by default.
Curb Appeal
First impressions are crucial when it comes to real estate. A home with neatly trimmed lawns, a fresh coat of paint, modern exterior lighting, and well-maintained landscaping conveys a message that the property is well cared for and is intended for individuals of means. An environment that is clean and appealing will pressure them to pay more.
Rennovations & Upgrades
Most homebuyers will pay top dollar for a house that is move-in ready. Increased market value can be achieved by installing new appliances, flooring, windows, or undergoing a bathroom remodel. Although not every upgrade will yield a complete return on investment, most can help drive buyer interest and result in higher offers.
Demand
Market value is highly responsive to buyer interest, meaning that when demand is high and supply is low, buyers are more likely to bid over the asking price to secure a deal. On the other hand, in a buyer’s market where listings are plentiful, even beautiful homes may struggle to attract competitive offers.
Seasonal Timing
Believe it or not, timing can be everything even when it comes to real estate. Homes usually sell faster and for more money during the spring and summer, when families feel like they can relocate or take a vacation. Therefore, it seems reasonable that homes would be priced well during that period due to the high demand for homes. That’s why trying to sell a home during winter, especially around the holidays, can be a bust.
What Is Appraised Value?
The appraised value, on the other hand, is what a licensed appraiser determines to be the value of your home after a formal and thorough inspection. This valuation is more objective and is based on strict criteria like square footage, structure, and recent sales data.
Most home loan applications rely on the appraised value when determining how much money they can lend to someone looking to buy a home. Therefore, if a home is appraised at a lower value than the offer price, it can complicate the deal or reduce the loan amount.
Factors That Affect Appraised Value
Size & Layout
The most crucial factors appraisers consider when valuing a home are its physical size, number of bedrooms and bathrooms, and usable space. That’s why a well-designed two thousand square feet house can have a higher value appraisal than a much larger home with weird and unused spaces.
Structural Integrity of The Building
Issues such as a leaking roof, cracks in the foundation, old wiring, or any other factor that compromises the structural integrity of the home will swiftly devalue a property when they are noticed. It’s not uncommon for buildings with strong, well-maintained structures to receive a higher score, as they are less risky and less costly to repair for potential buyers.
Lot Size & Zoning
Having a larger lot or one with favourable zoning can quickly increase the value of a home. Extra land offers potential for expansion, gardening, or recreational use, all of which add appeal. Lots that are zoned for multifamily use or commercial potential carry additional value based on what can be legally built or operated on the property.
Buying & Selling Properties With Bergen Realty Team
Now that you know the difference between appraised and market value, and the various factors that affect them, you can make the wise decision of choosing Bergen Realty Team to sell your home. We know Bergen County like the back of our hands, and we’ll pull out all of the stops to ensure that your home receives the highest possible value. Click here to contact our team directly and see the results for yourself!