Money For Lunch – Real Estate- Understanding the Factors that Influence Home Sale Prices

Real Estate- Understanding the Factors that Influence Home Sale Prices

July 11, 2017 11:37 AM0 commentsViews: 14

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The rebound of the property market with limited inventory and lower interest rates has helped to create a suitable environment for many sellers. Buyers in a competitive market deal with a range of real estate prices that make it necessary to learn more about how these prices are determined. There are different factors that influence prices in the housing market and affect the value of homes.


  • Property location in regards to homes and their prices refers to its effect on your lifestyle and life.
  • Key factors include local schools for buyers who have children, proximity to recreational centers, which is valued by most young buyers and homebuyers in general as well as proximity to employment opportunities in the area. Proximity to school, employment and entertainment all play a significant role in property value.
  • Being able to get a home that features these attributes exposes buyers to more competition and higher prices.


Some buyers intentionally look for properties that they can renovate while others prefer houses that they can move into immediately and have the ability to pay for this convenience. A good example is new roofs that yield generous returns when selling the home. Bathrooms and kitchens are among the essential improvements that home buyers value because upgrading them can be expensive and frustrating.

Comparable Homes

Comparable homes in the area also affect the market value of homes. Realtors and appraisers use the recent sales of similar homes to determine the potential price of a home. Appraisal processes are usually based on comparable properties and depend on sales and transactions on nearby homes that feature similar sizes. Find home sales training here.

Appraisal Value

Appraisal is formal process in the real estate sector that is used to price properties. Appraisers are required in all regions. When a buyer needs a loan to finance a home, appraisals are often required. Lenders approve loans according to the appraised amount.

Appraisers evaluate property through structured processes and observe recent sales of comparable homes to determine a price that can be adjusted according to improvements and upgrades that may have been made.

Interest Rates

Interest rates have a major effect on the property market. Buyers who want a mortgage to buy a home can use mortgage calculators to find out interest rates. When interest rates change, this can affect a buyer’s ability to purchase a home.

Lower interest rates lead to lower costs of obtaining mortgages and high demand for properties that subsequently results in pushing the prices upwards. A rise in interest rates means that the cost of obtaining a mortgage also rises, which reduces demand and prices of residential property.


Economic indicators that include GDP, manufacturing, prices of products and employment data are used to measure the overall condition of the economy. A slow economy has a similar effect on real estate and home sales. When consumers have the financial capacity to handle housing prices and spend more, this increase home sale prices.


Other factors that affect the prices and supply of homes include local regulations, zoning restrictions and customized features that are determined by prospective buyers according to their personal needs. Being aware of the factors that influence the property market is important for assessing investments.


Jeffery Miles is a freelance editor and writer. He covers various topics that range from business to culture. He enjoys the challenge of researching on diverse issues and finding new angles to provide information. For more about home sales training, please go to the site.


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