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There are a number of factors that affect house prices, from the age, condition, location and size of your home, to broader factors like the economy and current interest rates. If you’re thinking about putting your house on the market, it’s important to know what determines property value so you can ensure you get the most out of what’s likely your largest asset.

Read on to learn more about the main factors that make property value increase and how you can figure out how much your home is worth.

Recommended: Does Net Worth Include Home Equity?

Factors that Affect Home and Real Estate Value

Factor #1: Location

There’s a reason everyone will tell you that real estate is about location, location, location — it’s true. When it comes to factors that affect property value, location is one of the biggest determinants.

Keep in mind that while your home’s location works for you, others will have their own criteria. For example, how good are the schools in the area? Is shopping and entertainment accessible? What are property taxes like in the neighborhood? Is it a long commute to downtown or wherever many jobs may be?

Factor #2: Size

Size often isn’t the be-all-and-end-all, but it’s nearly so when it comes to what determines property value. Square footage plays a big role when it comes to house prices. For example, if the median price per square foot in the U.S. is $123, you’ll be getting more for a house that’s 4,000 square feet than one that’s 2,000 square feet.

It also matters how much of the space in your house is actually usable. Spaces like unfinished garages and basements as well as attics typically won’t boost your home’s value even if they do tack a lot onto the total square footage. What will matter in terms of square footage are areas like bedrooms and bathrooms.

Recommended: Should I Sell My House Now or Wait?

Factor #3: Real Estate Comparables

You’re supposed to love thy neighbor, but you might give them the side-eye if their home is not well-maintained and becomes a drag on the desirability of your street as well as on home prices. When it comes to home values, your neighbors are critical. If their homes are being highly sought by buyers, you’ll likely benefit from the popularity of the area.

The word to know here is comps, or comparable homes in your area that have sold in the last 12 months. These are part of what realtors and home appraisers rely on when estimating how much your home is worth.

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Factor #4: Age

While it may be frowned upon to ask someone their age, it’s an essential detail when it comes to home buying. If you’re dealing with a home that has a few decades in the rear-view mirror, you’ll have to do some math. How soon might the roof and other major systems need to be replaced or upgraded? That can affect the price someone is willing to pay, as they might want to pay less if they’re anticipating needing to shell out money for those repairs.

A house that is less than 10 years old — and even better if it’s less than five — can command more money because the buyer has a certain amount of confidence that repair bills shouldn’t be on the immediate horizon. They expect they’ll have time to save money for when that day eventually arrives.

Factor #5: Condition

If your home isn’t in tiptop shape, don’t expect to bring in the big bucks. In fact, if you have the luxury of time, it might behoove you to make any necessary repairs and do any upgrades and updates before you put your house on the market so you can maximize the chances it will get set at a higher price. Consider the cost of home improvements an investment.

At the same time, you don’t want to get too carried away here, as it is possible that you won’t be able to recoup all that you spent. Do just enough so that you might be able to squeak out some profit when you sell. While it varies by region of the country and other factors, Remodeling Magazine found that projects that can pay off include a garage door replacement, manufactured stone veneer and a minor kitchen remodel. Some of the less profitable projects included an upscale bathroom addition and an upscale master suite addition.

Factor #6: The Economy

You could have crossed all your t’s and dotted all your i’s — your home is attractive inside and out and you’re in a great location. Trouble is, if the economy is less than stellar, you could be stuck until it swings back into positive territory. If people are uncertain and feeling insecure due to the economy, they may decide to delay major life changes, such as buying a home. Or, if they do move forward, they may be looking for bargains, which is a downer for you.

Your local economy and market also figure into the equation. It’s about supply and demand. If there is a shortage of available housing in your area and tons of potential buyers on the hunt, you could capitalize big time on a hot market — think bidding wars and selling your home faster than you could have imagined.

Factor #7: Interest Rates

When interest rates are at the historic lows, it’s an incentive to buy. This is because doing so can be dramatically less expensive. On the flipside, when interest rates tick upward, fewer people may be able to home shop because it’s more costly. If demand slows, the price you can command may dip as well.

How to Check What Your Home Is Worth

Get an appraiser: One way to check how much your home is worth is to get an appraiser, someone who is licensed or certified by the state, to conduct a home appraisal. The appraiser will review your home from top to bottom and compare it to other homes in the area and beyond to determine its fair market value.

Make a list of comparables: You could also go dig up property comparables on your own. For example, you can call real estate agents with homes in escrow to learn the sales prices. There are also several websites that could give you valuable insight on your home’s value, including Zillow, Trulia, Redfin, Realtor.com and Eppraisal, among others.

Use an HPI calculator: Another option is to use a house price index (HPI) calculator , which uses data from mortgage transactions over time to estimate a home’s value. The calculator makes projections based on the purchase price of the home and the changing value of other homes nearby. This tool is ideal for seeing how much a house has appreciated over time and any estimated future changes in mortgage rates.

The Takeaway

Knowing what factors impact your home’s value is like knowing how much money you have in the bank. Determine where you may have weaknesses so you can make the necessary adjustments to get the maximum value for your home when you go to sell.

If you need to save up to make some necessary repairs and upgrades before you put your home on the market, a money tracker tool like SoFi’s can help you finesse your budget accordingly.

Photo credit: iStock/terng99

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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Life insurance terms can be confusing when you first come across them, so learning the language of life insurance can help when you’re thinking about or shopping for a policy.

You may know that for many people, life insurance is important to have, and perhaps you’ve started some initial research into life insurance policies.

Learning common life insurance definitions can help you make an informed decision when looking into coverage options.

Life Insurance Terms

Discover life insurance definitions, simplified.

Accidental Death Benefit

If a life insurance policy includes an accidental death benefit, the cause of death will be examined to determine whether the insured’s death meets the policy’s definition of accidental. This is often a rider, or additional benefit for an additional fee, attached to the policy. An example of an accidental death could be one caused by a car crash, slip, or machinery.

Annuity

This is a contract in which the buyer deposits money with a life insurance company for investment on a tax-deferred basis. Annuities are designed to help protect the contract holder from the risk of outliving their income.

An annuity may include a death benefit that will pay the beneficiary a specified minimum amount.

Beneficiary

This is the person or entity designated to receive the death benefit from a life insurance policy or annuity contract.

Contestable Period

For up to two years, a life insurance company may deny payment of a claim to beneficiaries because of suicide or misrepresentation on an application — for example, if the insured was listed as a nonsmoker but smoked often and died of complications related to that.

Death Benefit

The amount that will be paid to the beneficiary upon the death of the insured. The phrase “death benefit” is common life insurance terminology you’ll see in a life insurance policy.

Evidence of Insurability

In order for you to qualify for a particular policy at a particular price, companies have the right to ask for information about your health and lifestyle. An insurance company will use this information when deciding on approval and rate. If you are overweight, a smoker, or have a history of health problems, your policy will likely cost more than someone without those issues.

Free Examination Period

Also known as the “free look period,” this is a 10- to 30-day window during which you can cancel your new policy without penalty and get a refund of premiums.

Group Life Insurance

This provides coverage to a group of people under one contract. Group contracts are often sold to businesses that want to provide life insurance for their employees. Group Life Insurance can also be sold to associations to cover their members.

Insured

This is the person whose life is insured by the policy. The insured may also be the policyholder.

Permanent Life Insurance

These kinds of policies can provide lifelong coverage and the opportunity to build cash value, which accumulates tax-deferred. Whole life and universal life insurance policies fall under this umbrella term. Permanent life insurance is more expensive and complicated than term life insurance.

Policy

This is the official, legal document that includes the terms of the policy owner’s insurance. The policy will name the insured, the policy owner, the death benefit, and the beneficiary.

Policyholder

The person who owns the life insurance policy. It can be the person who is insured by the policy.

Premium

The payment the customer makes to the insurance company to pay for the policy. It may be paid annually, semiannually, quarterly, or monthly.

Term Life Insurance

This type of life insurance offers coverage for a set number of years, or “term,” of the insured’s life, commonly 20 or 30 years. If the insured individual dies during the years of coverage, a death benefit will be paid to the beneficiaries. Term life insurance costs less than permanent life insurance.

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Underwriting

Often viewed as a mysterious process, underwriting is simply when factors are evaluated relating to the applicant’s current health, medical history, lifestyle habits, hobbies, occupation, and financial profile to determine eligibility for coverage as well as what the appropriate premiums should be.

Universal Life Insurance

With this kind of permanent life insurance, policyholders may be able to adjust their premium payments and death benefits. The cash value gains vary depending on the type of universal life insurance policy purchased.

Variable Life Insurance

With variable life, another type of permanent life insurance, the death benefit and the cash value fluctuate according to the investment performance of a separate account fund.

Earnings accumulate tax-deferred. Fees and expenses can reduce the portion of premiums that go toward the cash value.

Whole Life Insurance

Whole life is another type of permanent cash value insurance. The premiums, rate of return on cash value, and death benefit are fixed and guaranteed. The cash value component grows tax-deferred. Whole life tends to be more expensive than other types of permanent insurance.

Recommended: Term vs. Whole Life Insurance

The Takeaway

Life insurance can be an important way to protect your loved ones’ financial future in the event of your death. While its terms can be a mouthful, they don’t have to be confusing. Understanding the definitions of life insurance can help you put a plan in place to protect your family.

If you’re shopping for life insurance, SoFi has partnered with Ladder to offer competitive term life insurance policies that are quick to set up and easy to understand. You can apply in just minutes and get an instant decision. As your circumstances change, you can easily change or cancel your policy with no fees and no hassles.

Photo credit: iStock/mapodile

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderlifeTM policies. SoFi is compensated by Ladder for each issued term life policy.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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The main factors that can hurt a home appraisal include needed updates, comparable properties, market conditions, your home’s location, and whether you hired an inspector to flag issues or necessary repairs. By getting ahead of the factors within your control before an appraisal, you may get a more favorable answer to the all-important question of what your house is really worth.

The more you know and understand about the home appraisal process, the better. Here’s a crash course of sorts on the process and what negatively affects home appraisal.

Recommended: Should I Sell My House Now or Wait?

A Primer on Home Appraisals

A home appraisal reveals the fair market value of a home, which is important whether you’re buying, selling or refinancing a mortgage. An appraisal can also be used to determine property taxes. Lenders require appraisals because they ensure that the lender won’t offer you a loan that’s more than what the home is appraised value is worth.

So, what do appraisers look for when they do a home appraisal? A real estate appraiser, who is a third party licensed or certified by the state, will review a home inside and out, looking at a home’s age, size, foundation, appliances and neighborhood, among other things. They will then compare the house to similar homes in the area to assess its value.

An appraisal is usually required by a lender when a buyer is getting a mortgage or when someone is refinancing their mortgage. If an appraisal is for a home sale, neither the buyer nor the homeowner can be present. When someone is refinancing, on the other hand, the homeowner is permitted to attend. That no doubt is a plus as it’s an opportunity for the homeowner to ensure the appraiser takes note of any upgrades and new features that could increase their home’s worth.

Things That Can Hurt Your Home Appraisal

Much hinges on the home’s appraisal itself, so you’ll want it to go as smoothly as possible. Start by knowing what hurts a home appraisal so you can avoid any hiccups that could prevent you from getting the highest value for your home.

1. Much-Needed Updates That Never Happened

If you’ve been putting off any needed upgrades, this is when it could come back to bite you. Let’s say you’ve been meaning to renovate your kitchen and somehow just didn’t get around to it. A kitchen that looks pretty much like it did 30 years ago isn’t going to wow anybody, least of all an appraiser who will wonder what else is in decline.

While it can be helpful to take care of some common home upgrades that can net you a return on your investment, you don’t necessarily want to go crazy updating either. Not only could it be tougher to recoup all the money you put into home improvements, you may find that while you love the changes you’ve made, your taste may not have universal appeal. It’s a delicate balance to make upgrades that will get two thumbs up from the appraiser and the potential buyers.

2. Comparable Properties

When it comes to housing, you do kind of have to keep up with the Joneses. With appraisals, it’s all about sales of comparable homes over the last 12 months. What are homes similar to yours on your street or a few blocks over selling for? If they are getting top dollar that will push up the price of your home. On the flip side, if those homes are hanging around on the market for months and selling at prices below expected, that could put a drag on what you can get for yours.

Comparable sales help determine the market, which is why both your real estate and your appraiser will look at them. Ideally, the appraiser, as much as possible, is comparing apples to apples so you get a fair appraisal. The other properties should be similar in size, age and amenities, among other factors. It’s a losing proposition for you if the appraiser goes for the extreme, say a house that sold at a bargain because someone was in a hurry to bail for whatever reason.

3. Skipping a Home Inspection

When it comes to your house, ignorance is not bliss. While you may know when you need to make a repair to a leaky roof, for instance, there can be plenty wrong that’s not obvious to you. That’s why it’s a good idea to have a home inspection before you put your house on the market.

A home inspector can suss out all manner of malfunctions that could be plaguing your house, particularly things you may be clueless about. If you get bad news, think of it as good news since you’ll now have the opportunity to make necessary home repairs before you put your house on the market and an appraiser comes with a magnifying glass of sorts looking for signs of trouble.

4. An Undesirable Location

Few things matter more in real estate market than location. If you’re in a neighborhood that’s seen as flawed or your house is on a busy or noisy street, that could all come into play when it comes to the value of your property.

Location also counts within your home. If your layout is dated — say it’s old-fashioned and highly compartmentalized instead of today’s more in-demand open layout concepts — that could be less attractive to buyers. Or, they might only be interested in knocking down walls and reconfiguring the space, which likely means they’ll want to pay less for the house if they are going to have put money into it to bring it in line with what they’re looking for.

4 Ways to Prevent Low Home Appraisals

Just like there are some things you can get out ahead of before they hurt your home appraisal, there are also some moves you can make to prevent your home appraisal coming in lower than you’d like.

1.   Hire your own appraiser: Typically, the lender hires the appraiser. However, there’s no reason you can’t hire your own appraiser before the sale. Your realtor should have a handle on someone who is experienced and has a reputation for giving fair estimates. You then can ask the buyer or lender’s appraiser to review what your appraiser produced.

2.   Provide records: If you have records of repairs and upgrades that’s the kind of proof that works in your favor. It also doesn’t hurt to have documentation like photos — before and afters aren’t just for an Instagram post of your new haircut.

3.   Prepare for the appraiser’s visit: Don’t dismiss the importance of maintaining curb appeal. Your home should be clean inside and outside before the appraiser comes over. Strive to get as close to an interior design catalog as you can.

4.   Dig up property comparables on your own: You don’t have to leave it to the appraiser and real estate agents to do all the homework. Go the extra mile and consider calling real estate agents with homes in escrow to get the sales prices. Create a list that you can pass along to the appraiser.

Checking Your Home Value Without an Appraisal

You can get a sense of what your home is worth even if you don’t get an appraisal. There are several websites that can give you valuable insight into your home’s potential value, including Zillow, Trulia, Redfin, Realtor.com and Eppraisal, among others.

Another option is to use a house price index (HPI) calculator , which relies on data from mortgage transactions over time to estimate a home’s value. Projections are based on both the purchase price of the home and the changing value of other homes nearby. This tool can help you see how much a house has appreciated over time. You’ll also get a glimpse of estimated future changes in mortgage rates.

Recommended: Does Net Worth Include Home Equity?

The Takeaway

Because appraisal value of your home is likely your biggest asset, it’s worth putting the time and effort into the appraisal process. The payoff could be huge if you tend to the major factors that hurt an appraisal or get proactive about preventing a low appraisal.

If you’re worried about budgeting for any necessary updates or repairs, a tool like SoFi can help you track your spending in different categories.

Photo credit: iStock/ucpage

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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