Location, Location, Enough Already: How Location Really Affects
Property Value
By Matthew Roberts, Certified General Real Estate Appraiser
If you're like me, you feel like you've heard the phrase "Location, Location, Location" too many times. And you might be onto something. The phrase is thought to be coined as early as 1926. Even then, I doubt it took much explaining. It is often used to convey that a property is thought to have a desirable location…and is therefore worth more.
Supply and Demand Drive Price, Not Location Alone
Location is an important factor, I'll admit that. It is one of many factors that can be used to analyze a property's value. But supply and demand are still the ultimate drivers of price. Supply is finite, and demand can come and go. For example, the quality of a particular location is not a constant factor. A desirable location today may be more or less desirable in the future. Changes in population, traffic, access, regulations, local economy, and market preferences can greatly influence the demand for that location.
Supply and Demand
Location Isn’t Constant
A desirable location today may be more or less desirable in the future.
Population
Who is moving in or out
Traffic
How busy the area becomes
Access
How easy it is to reach
Regulations
What the rules allow
Economy
How the local economy fares
Preferences
What the market wants
Farm · Commercial · Home appraisals | Missouri · Illinois · Iowa
Don't Overpay for the Location You Think Is "The One"
Don't pay too much for the location you think is "the one." A certain location may be desirable to an individual, but is it as desirable to the market? The best way to determine the premium for your location is to compare it to similar properties with similar locations. This type of comparison and analysis is common practice at our office, and we often find how consistent the market can be. Many times we make adjustments and select sales from certain neighborhoods or areas with location in mind. The focus is not necessarily on whether a location is good or bad, but how demand for the location relates to price.
Don’t Overpay for “The One”
Measuring a Location Premium
Desirable to you isn’t always desirable to the market.
Compare
Similar properties with similar locations.
Adjust
Select sales and make adjustments with location in mind.
Relate to Price
Focus on how demand for the location relates to price.
Farm · Commercial · Home appraisals | Missouri · Illinois · Iowa
Understanding quality of location and various market trends contributes to producing accurate appraisal results. At Spurgeon Appraisals, our customers are familiar with our professional level of detail and analysis in our reports. We are well qualified and equipped to meet your appraisal needs.
Appraisals for Every Property Type
Spurgeon Appraisals regularly appraises a variety of property types. We have experience appraising farms, residences, and commercial properties. We pride ourselves on providing excellent customer service and quality appraisals. Contact our team to see how we can meet your appraisal needs and exceed your service expectations.
