Determining the value of home can be sometimes a difficult task for a buyer. Just as there are many factors that can impact a home's value, the details and potential success of your offer also rely on several pieces of information. If you are thinking about buying a home, you may want to consider the following tips to gain a better understanding of property values. By utilizing these recommendations and discussing the findings with your agent, you might be able to not only find the best house for your money, but also a home that surpasses all of your expectations.
1. Investigate Locally
When searching for a new home, many prospective homebuyers start by checking local listings. After the search is narrowed down to a few neighborhoods of interest, walking or driving through these areas can give you a better idea of overall neighborhood quality. As you narrow your search, it might help to attend a few open houses in the local market to gain an understanding of pricing trends and witness how much interest is being paid to the homes already for sale.Â
In the early stages of shopping for a home, it can also be helpful to have your agent perform a Comparative Market Analysis. This report will show you the past sales prices of homes in the area and allow you to contrast those statistics with the current homes for sale.
2. Get behind the numbers
After you have compared the list prices of the homes you are interested in with other homes that have sold in the area, there are a few assessments of value you may want to consider. The most telling estimate of a home's value will be a professional inspection.
Another statistic that will provide you an estimated value of a home is the assessed tax value. However, as the assessed tax value sometimes doesn't take into account the amenities of a home, upgrades to the property or the nuances of the housing market, this value can vary from a professional estimate. Work with your agent to compare the details of your appraisal and the assessed tax value, taking into account all of the home's amenities and any issues of particular importance to your family - including such factors as the quality of the neighborhood, local schools and even how the home matches up to your long-term goals.
When trying to determine the value of a home for sale, it might also help to consider the status of the overall housing market. First, take into account national trends and determine whether it is a "buyer's market" or a "seller's market." Next, compare the local housing market to the national trends, considering both the neighborhood of the home for sale and a broader geographical region incorporating the surrounding city or other nearby communities. It is quite possible that a particular area may not be affected by national market trends, creating for instance a small seller's market within a broad buyer's market, or vice versa.
4. Pay attention to the details
Besides looking at local and national housing trends, there are a few more issues that can affect the value of a home and the details of your offer. First, you and your agent should find out how long the home has been on the market. It is believed by many that if a home has been for sale more than 30 days, sellers are often more motivated to sell and are more receptive to lower-priced offers.
In addition to the time spent on the market, you and your agent should also try to find out if there are any additional factors that could motivate the seller for a quick sale. For instance, if the seller has already purchased another home or is relocating to another state, you may receive a better response to your offer sheet.
After taking all these factors into account, you and your agent should be able to determine both the market value of the home and the right amount to bid if making an offer. Furthermore, the more you take the information you've gathered into account, the better you will be able to prevent potentially overbidding - which, of course, costs the buyer more money - or underbidding - an error that could discourage a seller from further negotiations.
Lastly, try to remember that the process of ascribing value to a home is not an exact science. Each time a house is sold on the open market the sales price will represent careful negotiations between the buyer and seller, with all of the factors here taken into account by each party. Therefore, above all else, the right home should not only represent a good value when analyzing appraisals and various market factors, it should also be the best value for you and your family.