How does your real estate agent decide on the right selling price for your home? What do they see that you don’t when they advise you on which houses in your search area are priced above or below market value? Whether you’re in the market to buy or sell a home, or both, it helps to understand how factors that are seemingly unrelated to the home impact selling prices. Perhaps you’ve seen the “estimated” home prices on online listing sites and wondered how accurate they can really be. The truth is they are often off by tens of thousands of dollars, because they are generated by computer programs that don’t take into account the qualities of the surrounding neighborhood. Meanwhile your agent takes into account a host of neighborhood criteria when evaluating a price. Read on for some examples of what surrounding factors can raise or lower a home’s price.
The quality of neighborhood schools has a huge impact on home prices. Even if you do not have school-age children, your future resale value is a good enough reason to take local school ratings into consideration before making a home purchase, and a reason to stay aware of scores in your current area. In a recent study by the Federal Reserve Bank of St. Louis, researchers found that if local public schools were 5% better than the state average, this translated into an 11% increase in home values.
Parks and Stores Nearby
According to a recent study by the Wharton School, having a park within walking distance is so important to families that home values increase by 10% if a park is within a quarter mile away. Easy access to retail and restaurants can up the selling price of a home by 6-8%, again, if the shops are within a quarter mile of a home in urban areas. Having these outlets about one mile away is the magic distance in the suburbs.
In Atlanta especially, we love our cars, so its no surprise that proximity to an interstate on-ramp is a major factor in home prices. The majority of home buyers state they want to live “within a couple of miles” of the highway, to save on gas and shorten their commute times. However, there is such a thing as too close when it comes to interstate proximity. If a home is located within half a mile of a major highway, the values begin to decrease due to concerns about noise and air pollution.
Empty Lots and Nuisances
This is common sense to most of us. Most people do not care to live too close to a landfill or power plant. Homes within a couple of miles of these environmental nuisances are as much as 10% cheaper than similarly appointed homes. The same is true for homes located close to large manufacturing facilities and food processing plants, largely due to noise and odor. And, too much space is not always a good thing. Urban home buyers state that too many vacant or unmanaged lots in a neighborhood are a major turn off, leaving home prices declining by close to 20% if there are too many such lots nearby.