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Top 5 Factors Influencing Home Value & How To Use Them

January 10, 2024


Min Read
New luxury kitchen renovation with solid wood cabinets.

The biggest financial perk of owning a home is building equity.

We build equity by either increasing our home’s value, or decreasing the amount we owe on it. (Or both!) Of course, making your monthly mortgage payment and naturally increasing home values will increase your equity over time, but you may be looking at something a bit *faster.*




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Let’s do this. The five main factors that influence your home’s value are location, size and layout, local market conditions, home condition, and select special improvements. That last one is a little bit vague, but we’ll clear it up quickly.

Size and Layout

Square footage is a big deal, but adding square footage alone isn’t a guaranteed increase in your home value. When appraisers are looking at your property, they’re considering, amongst many things, what people want in a home. And people aren’t just looking for square footage, but also a practical and appealing layout. For example, you can have a 1500 square foot house, but if the kitchen is closed off, the entryway is cramped, and you need to walk through one bedroom to get to the next, the value of that square footage is much less than a well-designed layout.

Open floor plans and flexible spaces that can adapt to different needs (like home offices) are also increasingly desirable. This allows people to make the space their own without doing major renovations. Don’t break out the sledgehammer quite yet, though—it’s always best to consult with a trusted real estate agent before you begin any major renovations meant to increase your home’s value. A good agent will have a firm grasp on the local market and what’s most effective for your area.

Home Condition

One might attribute a home’s age with its condition, but it’s completely within reason to see a well-maintained older home appraise for more than a poorly kept new one. How you take care of your home shows to the appraiser. Are upgrades done DIY style in a haphazard way? Those upgrades are going to have less value than ones done the right way.

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Upgrades and Renovations

Well-chosen upgrades and renovations can substantially increase a home’s value. But remember, not all improvements provide an equal return on investment. For instance, kitchen and bathroom updates usually offer higher returns than most other types of improvements. The quality and style of the work you do in those spaces matters, too.

Quick Tips

  • Keep styling neutral or easily changeable. You don’t need to make everything gray or beige, but installing a neon tile wall may not hold the same value for most people (including appraisers) putting a value on your home. For example, a standard wall painted neon green could be a great feel when you live in the home, and can easily be painted when listing the home for sale. Of course, you can always do just about anything to your home, this advice is specifically for making home improvements to increase value/equity. Knowing your purpose will help guide you through the decisions.
  • Focus on quality. Sometimes, doing half-baked renovations can be worse than doing any renovations at all. If it is a complex project like installing a new countertop or repairing unlevel floors, you may want to look at hiring a professional. After the project is complete, make sure to do a final walk-through with a focus on detail. Just because someone is a professional doesn’t mean they are looking at it with a detailed eye. This is your chance, before they complete the project, to have any final changes. If something looks or feels off, bring it up.
  • Make sure the project aligns with your lifestyle. If you’ll be living in the house for some time, consider how you use your home when embarking on large projects. Making changes to your home can be great for boosting your equity, but if it inhibits you on a daily basis, consider if it would be worth it.
  • Hire professionals. Wondering about a specific design choice? Hire an interior designer. Tell them your goal to increase your home’s value and any additional wants or needs. They can help you balance both sides and create something that is neutral for future buyers, and great for your current situation. The same goes for doing the actual work. Hiring a contractor or specialist to complete your project can help you feel more at ease with your decision.

Most Impactful Renovations

These are typically the most valuable renovations to increase a home’s value and, in turn, your equity.

  1. Full Kitchen Renovation: Upgrading appliances, countertops, and cabinets can significantly improve the value of your home. Many buyers prioritize a modern, well-equipped kitchen.
  2. Full Bathroom Remodel: Improving bathrooms, adding modern fixtures, and enhancing the overall design can attract potential buyers and increase your home's value.
  3. Curb Appeal: First impressions matter. Enhance your home's exterior by investing in landscaping, new siding, or a fresh coat of paint. A well-maintained exterior can boost your home's curb appeal and value.
  4. Energy-Efficient Upgrades: Adding energy-efficient features like new windows, insulation, or a high-efficiency HVAC system can appeal to environmentally conscious buyers and potentially reduce utility costs.
  5. Finished Basement or Attic: Converting unused space into functional living areas can increase the square footage of your home and its overall appeal.
  6. Deck or Patio Addition: Outdoor living spaces can be attractive to buyers. Adding a deck or patio can expand your home's usable space and increase its value.
  7. Smart Home Technology: Integrating smart home features, such as a smart thermostat, security system, or home automation, can make your home more appealing to tech-savvy buyers.
  8. Additional Bedroom or Bathroom: If feasible, adding an extra bedroom or bathroom can significantly increase your home's value, especially in areas where larger homes are in demand.
  9. Hardwood Flooring: Many buyers prefer hardwood floors. If your budget allows, consider upgrading from carpet to hardwood or refinishing existing hardwood floors.
  10. Fresh Paint: A fresh coat of paint, both inside and outside, can give your home a renewed and well-maintained appearance.

Factors you can't control. (But worth mentioning)

Of course, there are additional factors that impact your home value and equity. These are items you may not be able to control, but are good to know about when looking to buy your next home.


Barring the idea that you could pick up your home and place it on different land, you probably can’t change your current home’s location. But, hear us out. Knowing how location contributes to the value is important to your overall understanding, as well as any future home purchases you may make. Being in a “good” neighborhood is open to interpretation—but what does “good” even mean? Things like safety (a low crime rate) and access to amenities like hospitals and parks are important, of course. Future development plans for the area, and school ratings are important, too.

Local Market Conditions

Numerous factors contribute to the fluctuations and trends observed within a specific area, including interest rates, employment statistics, and the delicate equilibrium between supply and demand. By monitoring key indicators such as the average duration that homes spend on the market, the historical changes in asking prices, and the ratio of buyers to available homes, valuable insights into the state of the local market can be gained. If buying a new home, your real estate agent can help you understand local market conditions.

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