Buying a new home is an exciting and life-changing experience. Hopes, dreams, and visions of a new life all form part of the emotional process of purchasing a property.
Oftentimes, the romanticism of the purchase can cloud our better judgment. A new home is not just a dream fulfilled — homeownership is possibly the most significant financial step anyone will take.
That’s why it’s not only vital to pay the right price for a house but you must also consider the home resale value. Life plans change, kids arrive or leave home, and there may come a day when it’s time to hitch up the “for sale” sign. Knowing a home’s resale value, which is defined as its estimated worth in the future, is critical.
Luckily, some easy-to-follow guidelines can help you navigate the housing market. This guide will help you understand and unlock the value of your home and perhaps even increase home values.
Resale value is not taboo when talking about property. Get ready to see property values through a real estate agent’s eyes and learn how to make home prices work for you.
What Is the #1 Thing That Determines a Home’s Resale Value?
Location, location, location. Yes, location is the number one determinant in the resale value of a home. And it’s not just in the U.S. The U.K.’s favorite property-buying program uses the title “Location, Location, Location” to focus viewers’ minds.
Think about real estate in Hawaii, California, and New York. The first thought might be about how expensive those locations are for properties. By contrast, American real estate buyers can get the most bang for their buck in Mississippi, West Virginia, and Oklahoma.
But location is much more than a simple patch of land or property. An area includes multiple factors such as school districts, a neighborhood’s amenities, crime rates, and even the potential impacts of climate change.
Why Is Home Resale Value Important?
Anyone considering selling their home needs a ballpark figure to help plan their next move. Upgraders need to show lenders their home equity during personal finance assessments. People scaling down, perhaps for retirement, want to know the size of their nest egg.
The resale value of homes should also be thought of as a return on investment (ROI). After all, homebuyers spend many years paying banks interest rates on mortgages.
Back in 1990, the average American home cost $150,000. In 2020, the figure had risen to $383,000, over two-and-a-half times its value during the time it takes to raise a family. Midway through 2023, that average home value settled down to just under half a million dollars after peaking at over $550,000 at the end of 2022.
People’s property values can soar—and drop—easily with market conditions. Ensuring you have a desirable property is vital to protecting your investment and a realtor’s ability to sell it quickly for you.
What Determines a Home’s Resale Value?
Some people love a creaky, characterful staircase and a kooky bathroom with a low, sloping ceiling. But most homebuyers want large, functional bathrooms.
In short, less demand will likely mean fewer interested parties, fewer offers, and a lower home resale value. There are many ways to ensure your home retains its value. The first step is some research:
- Compare recent and historic property sale prices with similar homes in your neighborhood.
- Understand the current housing market. Is it in a boom, a down cycle, or somewhere in between?
- Make sure you and your realtor set an accurate price upfront. Buyers won’t like doing the above research and finding an overvalued property.
- Are there a lot of renters looking for property in the area? This could boost a home’s resale value.
- Floor plans are crucial. Find out what property types are selling well in your areas and the bedroom-to-bathroom ratio.
There’s a lot of information available to homebuyers and many may discount a property before visiting it. Keep reading to learn why.
Neighborhoods Affect a Home’s Resale Value
Home resale value can depend on what surrounds the home. For example, young professionals may want to be in a city’s heart with access to events, nightlife, and shopping. Being close to a train line, bus route, or highway may be ideal for a commuter but not for people who spend a lot of time at home or who want to avoid noise pollution.
On the other hand, families most likely want areas with good schools, quiet streets with low traffic, and access to amenities like shops, hospitals, childcare, parks, and employment opportunities.
So-called restrictive communities maintain value thanks to Homeowner Association (HOA) rules that apply. You know your neighbor won’t be able to throw up a shed or leave broken-down cars on the street.
Not all houses tick all boxes, but the more boxes you fill for potential buyers, the better. A one-bedroom apartment near the best schools won’t attract many family buyers, just as the perfect family-sized home in the middle of a strip of nightclubs might not.
Curb Appeal Impacts a Home’s Resale Value
First impressions count and a home’s exterior can be a dealbreaker before anyone steps foot on your property.
Curb appeal is a controllable factor that significantly influences home resale values. From the outside, potential buyers should see what a nice yard or garden there is and how lovely it would be to live there. Moreover, if a house has a great view, that could add anywhere from 15-75% to a property’s value.
Put yourself in the homebuyer’s shoes: That beautifully mown green lawn is where the kids or pets will play. The patio and barbecue are perfect for having friends over and entertaining — the sweeping, moss-free driveway will welcome them home from work. A privacy fence creates intimacy. All of these details add up to a much more appealing impression.
Also, remember that houses are starting to get smaller. In 2022, the median square footage of a new home built in the U.S. was 2,299 square feet, down from well over 2,400 square feet between 2014-17. Larger lots tend to hold prices well, especially with beautiful landscaping.
In contrast, a fixer-upper with overgrown bushes and wild plants suits those looking for a bargain in return for the work required to get the house presentable. In other words, poor curb appeal will cost you in the pocket.
Home Resale Value: Caring for Living Spaces
In Texas, the average seller spends around $14,000 on repairs and upgrades before selling their property. Why? Well, many buyers conduct home inspections before agreeing on a sale, and 86% of those home inspections find issues.In Texas, the average seller spends around $14,000 on repairs and upgrades before selling their property. Why? Well, many buyers conduct home inspections before agreeing on a sale and 86% of those home inspections find issues.
The solution is either the seller lowers their price to pay for those repairs or the buyer walks away. A well-kept home maintains a higher price and adds to its desirability to buyers. A home inspection before selling, which costs an average of $377, is a sound investment.
Let’s start with the core areas that help maintain a home’s resale value.
Keep Your Home in Good Working Condition
A home whose beating heart is in prime condition will appeal to multiple buyers. At its core, to maintain home resale value, ensure your property has:
- Well-maintained HVAC system and air conditioning
- Working plumbing with no leaky faucets or pipes
- An efficient and effective water heater
- A professionally installed and safe electrical system
- A watertight and functioning roof free from potential repairs
- Air leak and condensation-free windows and doors
- Tidy crawlspaces, attics, and basements
- Debris-free and sturdy gutters
- Energy-efficient appliances and infrastructure — energy-efficient homes have lower utility bills, which adds value
Consider interior upgrades and renovations like nice countertops and hardwood floors. Your current, aging furniture is perfectly fine for your lifestyle but may not show off the property’s wow factor.
Think of a “Better Homes and Gardens” magazine home and try to recreate a similar vibe. Even a few snazzy, relatively low-cost adornments on display — like a Nespresso or shiny tea kettle on the stovetop — can work wonders.
Decluttering Helps Maintain Home Resale Value
Decluttering gives your home the chance to shine. Yes, it’s a little mournful to remove some home comforts and keepsakes. But allowing your home to show itself in all its glory, rather than a living room covered in 80 fishing trophies, can boost its resale value.
Rooms will look larger without that workbench in the middle, as will closets with fewer clothes. Make the reception room welcoming; you want potential buyers to feel welcome!
Many people want to know about potential storage space but want to avoid seeing it in action. Consider renting a self-storage unit to hide some (but not all) of your excess belongings. Sell the idea that the property has all the space needed for the buyer’s hobbies and keep them from seeing how much of a squeeze it can all be.
Declutter one room at a time, and remember to sweep through the garage, attic, and basement. A garage can add between $12,750 and $33,150 to a home’s value so display it well.
What Will Increase My Home Resale Value?
There are plenty more tricks to help create a buzz about your home in the property market.
Natural light is a huge positive, so clear the windows and let the house sparkle. North-facing windows? You can lighten rooms with a coat of paint, with neutral colors particularly appealing.
Homebuyers often look for more than one bathroom in a property. The return on investment for installing a second bathroom is around 54% as most people love having more than one bathroom.
Floor plans are crucial, as is their language. Designate a primary suite separate from other bedrooms and focus on any open living concepts throughout. Guest suites or houses appeal to the higher end of the market.
First-time homebuyers or anyone buying a brand-new home should remember that it may take several years to realize good resale value returns. Building companies will still sell similar homes around yours for those first few years. They may offer closing incentives that affect your home’s value until the plots are all finished and sold.
And remember to be honest during a home sale. Be upfront about debts against the property, called liens. Have a list of disclosures about significant repairs and causes, covering events like flooding or foundation issues.
How Can I Increase the Resale Value of My Home?
Aside from the above, here are some hard figures on how home improvements increase the resale value of a home. The higher the return on investment (ROI), the more your home value holds or rises, making it easier to sell.
The most effective way to increase the resale value of your home is to replace the garage door with an ROI of 93.3% on the $4,041 average cost. Next is adding manufactured stone veneer, bringing a 91.4% ROI on the average $11,066 spent.
Here are some more popular home resale value returns:
- Minor mid-range kitchen remodeling: Average cost $28,279 with a 71.2% ROI
- Vinyl window replacement: Average price $20,482 with a 67.5% ROI
- Deck addition (wood): Average installation $19,248 with a 64.8% ROI
How Do You Determine the Resale Value of a House?
You can determine your home’s resale value through a home appraisal, asking a real estate agent, or browsing similar properties in your area.
Many online valuation tools can assist, making it quick and easy to pull comps in your neighborhood.
How Accurate Is Zillow Home Value?
One online valuation comps tool is Zillow’s Zestimate. It’s not an official home appraisal but a starting point to discovering your home’s value. Zestimate’s median error rate for on-market homes is 2.4%, rising to 7.5% for off-market properties.
What Type of House Has the Best Resale Value?
American homes come in many types. Searching for a three-bedroom house with two bathrooms will yield various properties, from bungalows to split-levels and apartments.
Gardens, interior specifications, room sizes, and location all influence the final prices. But so does its style.
Ranch-style houses best keep their resale value, followed by colonial houses, bungalows, and split-level homes. One-story properties are popular, especially with older buyers who want to avoid the hassle of stairs to move around their homes.
How Can I Spot a Home With a Low Resale Value?
Red flags for homes with potentially low resale values include:
- Being on the market for a long time. Check its location, floor plan, and aspect.
- The price tag is too high for the area’s market value. Buying the most expensive house in the neighborhood may seem a good idea. Still, it probably means improving its resale value will be more challenging.
- Are there plans for a new road, garbage dump, or bus station?
- The home’s overall condition is poor, making it likely to be a money pit requiring multiple renovations.
- Climate-change events like flooding or droughts in the area could require lifestyle adaptations or damage caused by storms or other extreme weather events.
Maximize Your Home Resale Value Before Selling
Buying and living in just one home all your adult life is unrealistic for most people. Like any investment, buying a home requires knowing what you can get from your time and money when you move on.
And because a house is an investment, keeping it in good working order is essential to protect your asset. Understand that basics like floor space, land, aspect, and neighborhood amenities will likely stay the same, so a house in a desired area will presumably remain desirable and maintain its resale value. And don’t forget the value of maintenance.
Just before you sell, spruce up the property to maximize your home’s resale value. Remember that a house’s overall condition affects utility bills. With energy prices rising, the property ticket price you pay now could increase because of the energy bills you pay while you live there. As such, it’s always a good idea to find the best electricity rates for your needs and lifestyle.
Brought to you by amigoenergy
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