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What Influences Your Home’s Market Value?

There are  many factors both major and minor that may either positively or negatively affect the market value of your home. There are traditional factors that cannot really be controlled and there are the non-traditional ones that can be unintended, unexplainable, unforeseen, or unwanted. Let’s call them “the six U’s,” the six him U’s are undoubtedly the more difficult to fix and in some cases impossible to prepare for causing a significant devaluation of a home.

Traditional Factors
1. Location: This is pretty self-explanatory. Distance to and from schools, major highways, hospitals, train stations, airports, and public recreation areas are primary indicators of price. In some local cases proximity to certain areas of interest can affect the value of a home by more than half. Whether it be a level of prestige and social stigma attached to residence in a higher-end area or perhaps the opposite.

2. Local Market Demand: Local markets have aspects that make them more appealing. Tax codes (for example low taxs in Komoka Ont v.s London Ontario are seen a a plus), weather, quality of school districts, crime rates, and quality of life metrics come into play when measuring local market demand.

3. The Economy: Buyer confidence cannot be underestimated, and faith in the economy can go a long way in the valuation. One must look no further than the 2007 US housing market collapse. In some volatile areas property rates plummeted more than 50 %. When people lose faith in the national economy and the long term potential of job security they will be much less likely to take out a mortgage.

4. The Home Itself: Almost all homes will appreciate in value if they meet the following criteria: at least two bedrooms, one full-size bathroom, a living room, a garage, and utility room. That being said, depending on market location there are literally thousands of location specific aspects to assess a home’s property value. For instance, which year the home was built, the name of the builders, the type of materials used, etc.

5. The Lot: Once you check the actual numbers, jump on the internet and use Google Earth to check out a bird’s eye view to give you an idea of how close the house is to the street, how much space separating you to your neighbor, how much yard do you actually have room to work with, and will you have privacy from your neighbors? These are all valid question that must be asked.

The Six U’s
1. Unintended: The presence or merely threat of fracking can send your property value plunging by more than 24 percent. All it takes is for one neighbor or landowner to sell and the rest of the dominos will fall in place. Once fracking has taken place, it becomes imperative to vacate the area, as drinking water usually becomes contaminated with chemicals used in the process. If the threat becomes real, expect to see plenty of moving trucks waiting to move your fleeting neighbors.

2. Unique: Differentiation is a key, having unique features can be an advantage and escalate the value of your home. Maybe your home was grandfathered in and is exempt to certain newly mandated building codes. This could be seen as an asset. Or perhaps your area was deemed high risk for sinkholes after the purchase. Now your property value, despite prime location has tumbled.

3. Unexplainable: If a few of your neighbors sell their homes well below market value for reasons unknown, it could decrease the market value of your home. This is only compounded when people begin to speculate as to why the value was so low and may drive away potential buyers. In addition, the problem becomes exacerbated when there are fewer neighbors to hold the credibility of the neighborhood.

4. Unforeseen: The presence, or over presence of rental properties in your neighborhood can drop values by up to 15 percent. As a homeowner you would not be ecstatic about having a bunch of rentals as those tenants are not responsible for the upkeep and more importantly curb appeal. The overabundance of rental properties can be a good sign that the economy is not where it needs to be for home ownership.

5. Unwanted: Bad neighbors are a pain, and unless you live in a home owners association there is no easy course of action you can take to remove the person and/or their junk from your sight. The presence of nearby hoarders can send your property plummeting . Instead of just watching a neighbor send the value of your house plummeting, try to get them to help or even offer to pay for a clean up which will undoubtedly be cheaper than the alternative.

6.  Unlucky:  random convergence  of events  both micro and macro that can't easily be identified.. in other words what we call  bad luck, bad karma  whatever phrase you like to use when the universe  is being unkind you.

Published Thursday, June 19, 2014 9:38 PM by Jim Straughan
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