First-time home buyers with little or no experience as buyers in the housing market, all face the same challenge: How to find the best home purchase value.
With tens of thousands of dollars in real estate gains or losses at stake, answering that challenge and determining an accurate solution is crucial, financially.
To clear away some of the mystery, we have a number of home valuation tips for you.
A couple of very basic questions you can ask yourself will go a long way toward simplifying the issue:
Why Are You Buying?
The answer is probably the key to the entire problem because it will tell you how much you really need to care whether you profit from this transaction of a lifetime.
If your answer is you're buying to provide a home for yourself and your family, where you plan to reside for many
What you're most concerned with are livability and lifestyle because you're putting down roots that will long outlast your transient financial fortunes and the ups and downs of the housing market and the general economy.
On the other hand, if your answer is that you're buying for an investment and are focused on the return it will bring when you sell it, then the potential for future appreciation is clearly important to you.
For the most part, any value judgments you make regarding the property are going to be based on their impact on resale marketing and appeal to future buyers.
Investing in real estate is pointless if you don't try to maximize your return.
How Are You Buying?
If your answer is financing the home purchase with a mortgage loan, your lender will essentially determine the value of the property by ordering an appraisal at your expense.
The lender will make certain the property gets a professional valuation for at least the amount of the purchase price the lender is financing.
If you are buying a home for cash, as do many investors, you will determine the value of the property and how much you're willing to pay for it.
How to Use Expertise and Available Tools to Find True Value
As mentioned, a professional appraisal is a common and dependable tool for determining the value of a home.
Appraisals cost several hundred dollars. If you are financing, your lender will order one at your expense.
Sometimes a seller will have one available to prove the value of certain features of a home.
Appraised values are based on gathered data and the professional judgment of the professional conducting the appraisal.
Appraisers have to be certified or licensed and they do not represent any individual’s interests, in contrast to a real estate agent.
An appraiser is simply contracted to perform the service of determining the property’s value.
Analyze Market Value
An alternative form of determining the worth of a property is analyzing
A given market value has more variance than the equivalent appraised value.
Unlike the appraised value, buyers have the most influence
Market value can be determined by either licensed or unlicensed individuals.
If the market value is calculated by a licensed real estate agent, the report may include active property listings, pending property sales, sold properties in the last 12 months and expired listings.
The most accurate comps are usually closed sales of similar properties for the previous six months.
There are plenty of resources available to you for estimating market value.
Most licensed real estate brokers and agents will provide market valuations -- called comparative price analyses or "comps" -- for free.
More Measures of Value
For maximum value appreciation, it's obviously best to buy when housing is least expensive.
Buying a home when the market is down is a no-brainer.
It's only in retrospect, however, that we can precisely identify the bottom of a down market.
But, even after the general market may have passed that point and turned around, real estate pros can still find great values because they know where to look.
Also, buying off-season offers value.
A purchase during the winter is a good
Also, many of the homes listed for sale in the winter are not new
Plan for updates and maintenance -- when you purchase an older house be prepared to invest in the home to upgrade it and make it more livable now and attractive to home buyers in the future.
Consider the importance of installing an updated kitchen and/or bathrooms.
The condition of the kitchen will likely affect the selling price; the same goes
And both are attractive to buyers because they are among the most costly remodeling projects and also the most disruptive to families.
Maintenance is important for many reasons.
Buying a home that has been well-maintained will help ensure that your own maintenance costs are minimal.
When the time comes to sell the home, having a solid maintenance record is attractive to potential buyers.
Lower prices may tempt you to buy a larger home in a less affluent area.
In some cases, when the area is “up and coming,” this may pay off.
However, you are usually far better off purchasing a small- or medium-sized home in an area where property values are unlikely to depreciate significantly.
Taken altogether, these home valuation tips will help you find the best home purchase value, whether it be in dollar terms or in terms of livability.