Construction industry

13 Factors That Impact a Property’s Value

Apr 27 2022


The first question that strikes your mind when you think of buying or selling a property is, how much is it worth?


There are a number of factors that impact a property’s value. For a layperson, estimating a property’s worth can be a daunting task. However, with a little knowledge and assistance, one can ace this task.

Therefore, we have come up with some expert tips that will help you understand the basics and will help you estimate the value of a property more appropriately.


Top 13 Factors That Impact a Property’s Value 


The location is one of the most important factors that impact a real estate property’s value. The assessment of a property’s value differs between residential and commercial property.


For residential purposes, a well-developed neighbour will cost more than one that lacks basic infrastructure. Other facilities affecting a property’s worth include its


  • Proximity to civic facilities such as malls, cinema halls, shopping centres, schools, hospitals, railway stations, airports, etc.
  • Areas that are closer to economic hubs are also in high demand. People working in these centres find it easy to commute to work.
  • Local infrastructure, including roads, facilities for electricity and water, etc.
  • The security infrastructure includes the installation of cameras at key points, police patrolling, criminal record checks, etc.

As far as commercial property goes, there are a number of other factors at play. Taxes, security assurances, availability of raw materials and labour, and its proximity to the market impact the value of the property significantly.


The Size of the Home

The size of a property is one of the major determinants of its value. It is obvious that a larger property would cost more. But, how is the price exactly measured?

The market value of the real estate is roughly measured in terms of price per square foot. You can calculate it by simply dividing the total sales value of the real estate by its square footage. For instance, if the sales value of a home is $400,000 and its area is 1,500 square feet. Hence, the price per square foot would be around $267.

The price per square can vary depending on the location of the estate. This has been discussed elaborately in the previous pointer.

How much of the space is usable?

However, it’s not only the size that matters. What is also worth considering when buying a property is how much of that space is usable. Spaces like garages, unfinished basements, and attics are usually not included in usable square footage. Whereas spaces like bathrooms and bedrooms are usable spaces and are valued more. So, a house with a larger number of bedrooms or bathrooms attracts buyers more. However, local culture and its preference for certain types of residences often play a significant part in this regard.

The age and condition of the property

They say, “Age is just a number.” Well, not so much in the world of real estate.

The age of the property is indeed an important factor that may affect its worth. Typically, homes that are newer are worth more than older ones. A 100-year-old property that would need major renovation can be a big turn-off for buyers.

On the other hand, a newer property that offers more facilities and is more in tune with the times would be an attractive deal. Also, you will not have to spend another hefty amount on renovating it. For instance, critical parts of the house, like plumbing, electrical, the roof, and appliances, would be newer and hence less likely to break down.

Apart from age, the condition of the house is also worth considering. People would rather buy an old, well-maintained house rather than a new house that needs major renovation. This is why a lot of buyers opt for an inspection contingency in their contract—which helps them negotiate repairs to avoid any major expenses after the purchase is done.

Upgrades and Updates

Upgrades, updates, and home renovations can significantly add value to your property. This is more significant for older properties that have outdated features. However, not all home improvement projects are created equally.


For example, renovations in the kitchen and bathroom generally have the biggest impact on the home’s value. Besides, as already mentioned in an earlier point, increasing the number of bedrooms is also a profitable deal. Also, the outer appearance is no doubt a major factor affecting a property’s worth. After all, it’s the first thing that catches our eyes. Decorating the garden is another way to increase a home’s value by up to 20%.


In the same vein, projects like adding a pool or installing wood floors can also be considered. However, these things are often catered to buyers who can afford expensive homes. However, it is worth noting that the impact of an upgrade varies depending on the market you’re in and on the current value of your home.

Neighbourhood comps

One of the indicators that you can rely upon to evaluate the value of a property is knowing about similar homes that have sold recently in your neighbourhood. These comparable homes are referred to as “comps”.


If you want to find out if properties had similar features to that of yours’, look at the following indicators:


  • Type of home (single-family homes, multi-family homes or condos)
  • The year it was built
  • The area in terms of square foot
  • Number of bathrooms and bedrooms
  • Location (near a school, mall, or busy street, for example)


Most real estate experts rely on comps to estimate a home’s value. It is done for various purposes, be it a home appraisal, a comparative market analysis, or just an open-door evaluation.


Advice for finding comps

How recently were the homes sold:

Do check when a certain home was sold. Look for homes that have been sold recently—the more recent, the more appropriate your estimation.

Similar Features:

It’s understandable that no home will have exactly the same features. So, choose homes that are MOST similar to yours. Look at the type of home (two-story vs. ranch), the year it was built, the number of bedrooms, bathrooms, and square footage.



Try to choose homes in the same subdivision as your home, as a home belonging to a different subdivision may have different HOA rules, school district, etc. Hence, it would make it unfit for comparison.



If your home is located in a unique placement, such as on a busy street, mall, or airport, look for comps that have the same placement.


The fact is that you will not find two comps that are exactly the same. So make adjustments for key differences before evaluating the worth of your home. Doing this manually can be very tough, especially when comparing minute details like vaulted ceilings, proximity to a good school, or something intangible like the scenic view. So, in order to be precise, you will have to account for a host of different features. Also, it is obvious that you would look at many comps before reaching a final value.


Luckily, computers are there to help you with this task. You can combine a robust data model that can analyse hundreds of comps for any given address with insights from local pricing experts.

Interest Rates

You may wonder, why should interest rates matter? Well, interest rates matter. A lot. Both short-term, as well as long-term interest rates, can influence a property’s value.


Consider this, if the Reserve Bank decides to increase the interest on loans, lenders will follow. This will mean that a borrower will have to pay a higher monthly mortgage payment. Expensive mortgages, thus, will increase the price of the property. Meanwhile, a reduction in interest rates means that the prices of properties will drop, making it more affordable. The Economic

Conditions of the Place

The broader economic conditions of an area often impact people’s ability to sell or buy an investment property.


Hence, when the economy is booming, there will be more jobs and people’s incomes will increase. With the increase in the purchasing power of people, investment in a new home or second home will become more probable. This rise in demand will lead to higher property prices.


On the other hand, if an economy is struggling with unemployment and wages drop, people’s ability to buy property would also decrease, leading to a drop in the prices of property.


It is, therefore, important to keep yourself abreast with the prevailing conditions in an area before setting a price for a property. Especially when you are looking for the best time to sell your house.


Planning/Building Regulations

Construction of property generally requires two kinds of permission.


First, it needs to adhere to the building regulations, that cover the technical aspects of the construction process. The second permission is the planning permission that includes the design, shape, and size of the property. Failure to abide by these regulations could lead to the demolition of a property. Thus, the amount of planning permission and building regulations required can have an impact on the value of the property.


Supply and Demand

Just like with almost any other commodity, the push and pull of supply and demand has a major influence on the value of the property. High demand with fixed supply will raise the price of properties as more people try to buy them.


Supply can be increased if a large existing structure is split into several smaller units. Another way of dealing with a supply shortage is by building entirely new properties. Similarly, when supply exceeds demand, there are fewer buyers for it. Hence, the price drops.


Does it leave enough potential to renovate?

The renovation potential of a property interests a lot of real estate investors and homebuyers. This provides the potential to improvise certain things, such as increasing the floor space, adding an extra storey or bedroom, adding an outdoor patio, or adding a pool. All these little changes can increase a property’s worth.


Hence, contracts that give an allowance to a buyer to personalise or improve a property increase the value of such property.



The property’s paperwork also affects its value in the market. Property documents such as sale deeds, title deeds, verifications, clearances, property tax receipts, building certificates, etc., help prove whether a property is legal or not. Hence, they are integral in the evaluation of a property’s worth. Once these documents are secured, the value of a residential property will increase compared to the one that is riddled with awaiting approvals and pending documentation.


The local market

Another important aspect to look at is the market you are in – whether it’s a seller’s market or a buyer’s market. Let us assume that your home is in excellent condition, situated in the best location and with premium upgrades. However, despite this, you may face difficulty selling your property at your preferred price.


If the number of other properties for sale in your area was greater than the number of buyers in the market, the prices would automatically drop. This is known as a “buyer’s market” and vice versa. If you’re a buyer in a buyer’s market, you have more room to negotiate the terms and conditions of the contract. On the contrary, if you’re selling in a buyer’s market, you may have to make concessions to attract more buyers. Some concessions can be paying closing costs, covering repairs, being more flexible with the timeline, etc.


Final thoughts

It is important to know a property’s worth before buying it. Being aware of the factors that impact a property’s value helps you avoid mistakes both while purchasing and selling a home.


This article explains all the points that would help you be a clever buyer or seller. You can also refer to some other factors that can help you get an accurate idea of a property’s value. Few other factors to consider are crime rates & unemployment in such areas. Hence, it is advisable to get the help of a professional real estate agent or a reputed construction company like BricknBolt. The expertise and experience that they BricknBolt bring to the table will accurately determine the property value & appraisal in the area.

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