Category — Home Values

When you’re moving from a higher-priced area to a lower-priced locale, it becomes difficult to objectively judge home values. It’s human nature to judge values and prices based on what you know. Unfortunately, if what you know is significantly higher-priced than the area where you’re moving, you run the danger of overpaying. Everything looks like a great deal, and you may jump too quickly at a deal that isn’t as good as it seems. Recalibrate your sights based on the area where you’re looking; don’t bring your old property value guidelines along for the ride.  

Going into a home-buying experience, you’ve got certain expectations about price and real estate values. If you’ve done your homework before you begin shopping, you’ll have a good idea about home values in a a given area and will know if they’re in line with your needs. This will enable you to more accurately focus on a specific neighborhood that’s likely to have home values within your price range, and exclude neighborhoods where values are too high for you. However, when you’re targeting areas based on prices, be careful not to exclude a bargain in a high-priced area.

Many home features and amenities add value to a home, but it can be difficult to determine how much value a particular feature adds. When you’re looking at a home with a pool, for example, how much extra value does the pool add versus a home that doesn’t have one? How about a larger kitchen, or wall-to-wall carpeting? Sometimes you find a feature or amenity that you love and you may end up paying more than it’s worth. Make sure you determine the value of a home feature before you pay too much for it.  

Comparable home sales form one of the biggest factors in determining a home price. If comparable homes sell for a similar price, you know you’re getting a good deal. If comparable homes sell for more or less, it might be a key to negotiate further or evaluate why a home is selling below market. However, what appears to be a comparable home at first glance might not actually be fully comparable. Make sure you know a comparable home is actually comparable before you use it as the basis for your purchase price.  

Thinking that $200,000 home is a great deal because it’s better than the home that sold for $198,000 a month ago? Think again. Comparable home sales only tell a part of the story. That home that sold for $198,000 may have had $18,000 in seller’s concessions, making the real value of the property around $180,000. At that price, the $200,000 home doesn’t seem like such a great deal. Don’t be misled into paying too much for a home based on comparable sales data.

When you’re buying a home, you might be tempted to rely on information from your real estate agent, the appraiser or other real estate professionals to tell you whether you’re getting a good deal. Professionals should know the market, and it’s easier to rely on them than to try to understand the data and make an informed decision on your own. Unfortunately, relying on this mindset can lead to big problems. Everyone you deal with has their own agenda, and may not have your best interests in mind. Additionally, no-one can accurately predict a real estate market, and you can’t rely on other people to do it.  

Some sellers have an appraisal performed on their property before they put it up for sale to determine the value of the property. A seller then uses the appraisal as a selling tool; a cornerstone for determining the home’s value and validation for the buyer that the home is worth what the seller is charging. As a buyer, you should take these appraisals with a grain of salt. They can be helpful in setting a ballpark figure for cost, but you should do your own footwork before you agree on price.  

Overpriced homes seem like an easy thing to avoid, right? All you have to do is look around the market and check comparable sales to see how much homes are selling for and determine whether the home you’re buying is a good deal. While this is sometimes true, it can also be true that the housing market reflects an inaccurate picture of current market values. You may need to pay a little more attention to avoid overpriced homes, and beware of price-related sales tactics.  

Home sellers and home buyers often have far different ideas of the value of a home. Sellers are almost always asking too much for a home, and buyers typically have a good idea of the home’s actual value. How do you bridge the gap between buyers and sellers to get the home you want at a reasonable price?  

Median home prices are something you’ll hear about over and over again when you’re home shopping. Your Realtor may tell you about median home prices, and use it as a way to compare potential houses in your marketplace. Unfortunately, median home prices aren’t the ultimate evaluator of homes in your area. Educate yourself about the myth of median home prices.