Whether you are a first-time buyer or you have been a part of several real estate transactions, you may not have given a lot of thought to how the value of homes for sale in your area are determined. There are obviously several factors that go into that determination, and here is information on a couple of the most important ones.

Land
It is very important to know that while a physical structure may depreciate over time, the land underneath that structure typically appreciates. People tend to focus on the fact that the purchase of their home is the most important investment that they will every make and overlook the significance of the land on which that home sets. The shape that a structure is in will have an effect on its value, of course, but property prices are more a function of local supply and demand.

Land appreciates due to the simple fact that it is in limited supply because no one is making any more of it. As populations continue to increase, so will the demand for land. When supply is limited, prices increase. The question, then, becomes how much the land will appreciate, and how its value will either be enhanced or degraded due to improvements to your property.

As structures age, again, they typically depreciate. More money has to be sent on maintenance and to keep it from either falling out of style or becoming obsolete. If property is allowed to deteriorate over time it will not only fail to add value to the land, it may actually remove value. There are times where simply razing the structure will increase a parcel's worth.

Location
The location of houses for sale in your area may actually have more of an effect than their physical attributes. Consider two similar homes, one on a cul-de-sac and one located off a heavily transported road. A family with children may place more of a value on the structure near the cul-de-sac because they feel it will be safer.

Families with small children may value a structure in a youngger neighborhood than one in an older neighborhood, even though the home in the "older" location is superior. No matter how nice that home may be, the family will want their kids to be around other children so they have playmates.

Another factor that must be considered when thinking of location is what type of future development is likely to take place in the area. Many houses for sale may not seem like great investments at the present time, but if there is a passenger rail line about to be constructed nearby, or a new shopping mall, that value may increase substantively down the road.



Source by Alfred Ardis