Your New Home – What Price is Right?
When looking for your new home to buy the best approach is to start with a plan. By doing some preliminary internet research, you can get a pretty good idea of what homes are being sold and for what price. Of course, when collecting your data make sure that you are comparing similar properties. Each piece of real estate is different, even in the same neighborhood. Certain features in the house, lot shape and size and lot location will change the values of each home.
So what is a fair, or better the right price to pay for the residential home you want? Consider the methodology that the appraiser uses when assigning valuation to your home. An appraiser will consider the many market forces that affect the valuation. The appraiser attempts to reconcile various opinions and meanings to arrive at a fair and good number. Since no two pieces of real estate are exactly alike, it is often difficult to assign exact values when doing comparable sales. Adjustments have to be taken into consideration for different characteristics like building materials, amenities and lot size and location.
If all real estate markets were calm and the supply of homes equaled the demand then bid prices could be more easily valued for correctness. Unfortunately, this never occurs. There is either a buyer’s market where the supply exceeds the demand. Or there is a seller’s market where the demand exceeds the supply. This timing factor is what causes discrepancy and has the effect on the monetary worth of real estate to a prospective buyer and seller.
Market Value – represents the most probable price which a property should bring in a competitive and open market and the following conditions exist:
a. Buyer and seller are motivated
b. Both parties are well informed and well advised and acting in their best interests
c. A reasonable time is allowed for exposure in an open market
d. Payment is in terms of cash or in comparable financial arrangements
e. The price represents normal consideration for the property sold without being affected by financing or sales concessions by anyone associated by the sale
Start gathering the pertinent home sales information for the area you are considering locating. Considering today’s real estate market, going back nine months to a year would be a fair estimate of time. Look for homes that are very similar to the property you are considering. Analyze these homes that were sold, are pending a sale or expired from their listing due to a lapse of contract time. When you are done with this analysis, compare your potential house with the rest of the market. Is your house overpriced? Has it been on the market much longer than comparable properties? You need to ask for the seller’s property disclosure list that discusses any past or present issues regarding the house. Has there ever been a fire or flood in the house. How about termite damage or roof repairs? If this is the case then perhaps other potential buyers decided this was not the best available property. It is easy to allow your emotions to overrule your head. You need to stay objective when making your decision for the best home to buy. After all, you are the one who is going to live there.
Do you need to hire a realtor to help you even after you have done your initial research? The question can best be answered by you. In some States, such as Florida, the seller pays the realtor’s fee so you could utilize the experience of the realtor and not pay any money. You already have done your homework so you are familiar with the property. The realtor will see that you are informed and probably know more about the property than they presently do. Remember the realtor is not an adversary. They practice under a code of ethics and are bound by the laws of their State. Trust that they will help you and respect their knowledge of the area you are considering. They are a part of your team helping towards the purchase of your new home.
