Can you give me some general guidelines for figuring out what my home is worth? How much appreciation can we expect when we sell our home?
This question comes up all the time. At Starbucks. At the Giant Eagle. And of course, at a listing appointment. It’s the topic of many conversations. Home value is something that seems to always be on everyone’s mind.
If you study the trends in our area and have owned your home for 7 years or less, the answer is easier than you might guess. Generally speaking, when you own a home, you are using that home and as a result, its components are less valuable when you sell the home than when you bought it. If you bought your home in 2008, your roof has now been used and has 7 years less life on it, as does the water heater, the refrigerator… If you did absolutely nothing to your home and there was no market appreciation, you would expect your home would be worth less seven years later because everything has less life left in it.
However, our market does appreciate, very slowly. In most cases, there is enough appreciation to offset the amount of value you have “used up” during your ownership. However, if you have done absolutely nothing to the home – haven’t replaced, refreshed, updated or improved anything, then unless you bought your home prior to 2007, you probably wont sell your home for much more than you bought it for. What if this isn’t you…?
If you have kept your home updated, you will be entitled to some appreciation. In situations where homeowners have actually made improvements beyond routine maintenance – perhaps having been remodeled the kitchen or bathrooms, or added a patio or deck, they can generally recoup their investment. So the rule of thumb in establishing value is really quite simple if you bought your home less than 8 years ago. Start with your purchase price. Add in any improvements that you made that are beyond typically expected repairs and maintenance, deduct the cost of any urgent maintenance or repair items that you have ignored and that will get you reasonably close to what the market will bear for your home. Of course, if you transformed a home – bought a home that needed a ton of work and turned a diamond in the rough into a diamond, if you were careful with your budget it is quite possible that you could make a handsome profit as well. And if you bought your home greater than 7 years ago? Appreciation can start to play a greater role in value and the analysis will require a very close look at comparable sales.