How Buyers Determine a Home’s Value

Buyers determine a home’s value by comparison shopping. Here’s what I mean.

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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:

  1. The appraised value—i.e., what appraisers value a home at.

  2. The assessed value—i.e., what the county or state values a home at (for tax reasons). 

  3. The seller’s value—i.e., what a seller thinks their home is worth. 

  4. 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.

Increasing a home’s value means lowering its price or adding more features and benefits for the same price.
— Leigh Marcus

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.