You bought your home several years ago and now you are wondering how best to value your home and what you can do to increase its value. Figuring out the value of your home can be difficult if you are not able to strip emotion out of your calculation. Remember that your home is almost always likely to be worth much more to you than the actual monetary value placed on it by a property valuer or estate agent.
Most estate agents use a method called “comparative market analysis”, which basically means that they work out the value of your home based on the relative values of the properties in your area and taking into account recent property sales data in your area.
A number of factors may affect your home's market value, including:
- External characteristics - kerb appeal, home condition, lot size, popularity of an architectural style of property, water/sewage systems, sidewalk, paved road etc.
- Internal characteristics - size and number of rooms, construction quality, appliance condition, demonstrated "pride of ownership", heating type, energy efficiency.
- Supply and demand - the number of homes for sale versus the number of buyers; how quickly the homes in your area sell.
- Location - desirability for a particular school district, neighborhood etc. Typically homes situated near schools sell much faster and are considered desirable properties, particularly if schools are fussy about accepting pupils from outside their “catchment area”.
Before you rush out to renovate your home in order to improve its value, you need to carefully consider the type of renovation you want to make. The last thing you want is to lay out R150 000 on renovations and then find it only actually improves your home value by R50 000.
- More space - If you have a wall in your home that is not considered a structural wall (that is, it doesn’t need to be there to support the building structure), knock it out. Trends today are firmly entrenched in open-plan living and wider spaces. If you really want an island in your kitchen, consider a portable island which can be moved out of the way or removed entirely by a potential new owner.
- The garden - Take some time and possibly invest in a gardener or landscaping service to make sure your garden looks neat and inviting. An unkempt garden is one of the first things a potential buyer will notice about your home and first impressions last. A small investment in your garden can lead to a difference of four times as much in your property value so this is not a change to overlook. For example, an investment of R10 000 in your garden can improve your property value by up to R40 000.
- Go green - With increasing concern about climate change and rising costs in electricity, the investment to make your home as environmentally friendly as possible can dramatically improve the attractiveness and value of your home. Consider solar geysers, efficient lighting systems, and ways to maximise the use of water in and around your home. A solar water geyser can save you up to 40% in heating energy costs.
Be wary of rushing into renovations that are costly and don’t add as much value as they will cost you, such as a swimming pool. Yes, it may make a difference to the value of your home. However, when weighed against the installation and maintenance costs as well as your increased water and electricity bill, this is not actually a renovation that should be first choice.
Visit our home advice page for more useful tips.