How We Determine Your Home’s Value

Learn which factors determine price!

Your home’s value is decided by several factors, some that fluctuate while others are more stable. During a market analysis I help home owners’ asses their houses market value. As a part of my Plan, Prepare and Profit series I want to share this process with readers so you understand where your profit comes from. A home’s value is determined through multiple variables. Let’s start with what I call the Four fundamental Factors. In order of importance they are:

  1. Location, Location, Location

Location matters because it influences so much including school districts, ease of transit, and resale value. In general, the suburbs closer to the Twin Cities have higher equity. The surrounding homes also affect the worth of your homes. This creates a neighborhood equity as well. Even within a neighborhood, different locations are worth more. For example, a home in a cul-de-sac is removed from traffic providing a safer and quieter environment than homes on busy streets. This location can raise a home’s value even from a similar house down the street.

  1. Style

The style of a home effects its value more than you might think. Certain styles are more desirable to buyers. A split entry might not entice an aging couple looking for less trips up and down the stairs. Some styles only attract a small section of buyers. Because of this it’s important to compare, whenever possible, ramblers to ramblers, two stories to two stories, etc.

  1. Year built

This one makes sense to most people. Newer homes have less overall wear and tear. They also aren’t prone to needing big repairs and replacements such as the roof, furnace, or air conditioning. Recently built neighborhoods typically have a higher and more consistent neighborhood equity. However older homes have their benefits too. They often have more personal charm than newer construction and a more classic style. Whether old or new, having a move in ready house is a big draw for all buyers.

  1. Finished square feet

The size of your home effects the value based on economic principal. The more there is the more you pay. Buying 4 cookies costs more than 1. However, you might pay more for one cookie if it’s from a specialty store, intricately decorated, and the only cookie you can find to buy. This is why, though very significant, Square footage is the least important of the Four Fundamental Factors.

There are also secondary factors. In no particular order these include:

  • Recent updates
  • Number of bedrooms and bathrooms
  • 3 or 4 bedrooms on one level
  • Floor plan
  • Views
  • Lot size


The third factor is the condition of the home and its amenities.

Hardwood floors are nice but not if they are scratched by animals or years of use. Decorative wood trim could be appealing if it’s not covered in peeling paint. As I mentioned most buyers desire move in ready homes or close to it.

The fourth and final factor is the market.

The market is the factor most subject to fluctuation. It raises and falls with the economy, house inventory, and even with the seasons. Your home has a price range. If this range is 250,000 – 275, 000 during winter your home will likely sell in the lower end of this range. In spring market, it will sell closer to the maximum. The amount of inventory compared to the number of buyers creates the stark difference between winter and spring markets. Few people want to move during the busy winter holiday season and even fewer want to move all their worldly possessions in ice encrusted subzero temperatures. While inventory is also down in the winter it is still higher than the number of buyers. During the spring market, which starts in February, ratio reverses. Inventory skyrockets but so does the number of buyers until there are more buyers than houses. Interest rates also affect the market. As interest rates go up a home’s value goes down.

Blending all these factors together creates the price range and value of a home. If you’re interested in a market analysis follow the link below:

Get a Virtual Price Opinion from Sheryl!

Read related blog posts:

Is Spring the Best Time to Sell?

Updating a Super-Sized Home, What do Buyers Expect?

If you have any questions feel free to contact me at 612-889-6496 or [email protected]

Read what Sheryl’s clients are saying about working with her and the Selling South of the River team!


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