How do buyers determine the value of a home? First, let’s define the four types of value that can be attributed to a home:
The appraised value—i.e., what appraisers value a home at.
The assessed value—i.e., what the county or state values a home at (for tax reasons).
The seller’s value—i.e., what a seller thinks their home is worth.
The buyer’s value—i.e., what a buyer is willing to pay for a home.
Buyers determine value by comparison shopping. They look at a price that’s been set on a certain home based on its features and benefits and compare it to the features and benefits of similar homes that are currently for sale or have sold recently.
For example, let’s say you were buying a new car. If one dealership offered a car worth $40,000 and another dealership offered the same car at the same price, except this one has a fancy trim package and high-end rims, which one would be the better value? Probably the car with extra features, right? However, if the first dealership dropped the price of their feature-less car to $25,000, that would become the better value.
So from a buyer’s perspective, increasing a home’s value means lowering its price or adding more features and benefits for the same price.
If you’d like to talk more about determining a home’s value or there are any other real estate questions I can answer, don’t hesitate to reach out to me. Give me a call at 773-312-7550 or email me at Leigh@LeighMarcus.com. I’d love to help you.