There are numerous tips for determining the value of your home that are market-wide, but a luxury home is a different breed from the rest. Square footage and number of bedrooms may be helpful in mid-range real estate deals, but as prices climb, so do features that are difficult to gauge the value of.
The problem tends to be that the value of characteristics in one home is usually determined by how people value that characteristic in most other homes. If, for instance, most people are willing to pay much more for homes with kitchen islands, then a buyer or seller can determine that their kitchen island adds a certain amount of value to their residence.
For this reason, when it comes to features such as infinity pools, stunning views, elevators, and the like, there’s not a lot of comparison to be made. After all, to many buyers, the meaning of luxury is a home that is unique and fitted for their own personal specifications.
With all this in mind, there’s no need to fret when you purchase your first luxury home and want to calculate the value! The experience can be smooth and quick, and you can avoid the stress and confusion as long as you keep some of these things in mind.
Who’s Calculating Luxury Home Value?
There are usually a few different people who have reason to calculate the value of your home, and they may appear at different stages in the buying process.
- In almost all cases, when you’re borrowing money from a bank to make a real estate purchase, your home will be visited by the lender’s appraiser. This person will take into account all of the features of your home, as well as the history, and calculate the value. Typically, the lender will then lend the value of the appraisal.
- If you are selling and are unsure of what price set for your luxury home on the market, you can hire an appraiser yourself to gauge what you can expect. This is also an area in which real estate agents are particularly helpful. In your case, a luxury real estate agency is appropriate.
- You may find your home value calculated by a tax assessor. Assessors provide assessed valuations annually, which form the basis for a property owner’s annual property tax. The assessed value is a percentage of the fair market value and takes into account the overall quality of the property, property values, square footage, home features, and market conditions.
What Factors Are Driving Luxury Home Prices?
In the housing market, the rules of the game are different for high quality, luxury homes. Here are some factors that make a difference in the value of the luxury home you’re looking to purchase!
- Maintenance: Ideally, a luxury home should be efficiently designed. This is not to say that maintenance will be cheaper than other homes. It is to say that certain factors (such as those that affect insulation or other areas that are billed monthly, or that are in regular need of attention) should require less time or labor than less expensive homes. For instance, an HVAC system reduces labor over the long term.
- Replacement Cost: How much would it cost to rebuild your home? This is often used by assessors and factored into the final value.
- Views: This seems simple, but it can be the reason one luxury home of roughly the same size costs much more than another in the same neighborhood. The right setting is an essential part of the luxury experience for many homeowners. Although it is difficult to assign a monetary value to a view, it suffices to say that it can make a noticeable difference.
- Location. Location: As goes the mantra of many realtors, location is everything. The luxury real estate market means different things in different regions, and ultimately, the value of the lot beneath the home says a lot about how much you can expect to pay for it. A luxury home with roughly the same features and size in Fort Worth would go for a lot less than a similar home in Los Angeles.
- Privacy: Many luxury homeowners desire privacy and seclusion. Rarely in one’s fantasy of their dream home do they imagine onlookers. Thus, a home that is less accessible to other people is often valued highly in the luxury real estate market.
A Broader Spectrum
Essentially, when trying to calculate the value of a luxury home you desire to purchase,
it’s not enough to compare prices in the area. You cannot assign a set value to homes of a particular size or style. You need to look at a broader region and look for similarities beyond size and neighborhood. Fortunately, a great real estate team is always going to save you time and energy in these confusing situations!
Sarah Bernard Realty Can Calculate the Value of Your Dream Home!
Our expert real estate team has extensive research and experience in the St. Louis housing market. We know what makes homes valuable, and what doesn’t. Calculating the value of your home is a puzzle, but we approach all of our clients with respect, professionalism, competence, and expertise. Schedule your appointment today for a top-notch luxury real estate purchase experience!