Figuring Out How Much the Property is
Worth
Right At Home
Daily: Finding It: House-Hunting
Figuring Out How Much The Property Is Worth
By Margaret Crane for Right at Home Daily
You think you've found the right home. But is
it really worth what the sellers are asking?
Before you give away your hard earned money,
do some thorough research.
First,
ask your agent to prepare a comparable market analysis (CMA). This
is a compilation of sale prices of homes similar to yours in the neighborhood
which have recently sold.
You'll also want to check out the school district,
crime statistics, and whether property values have been generally rising or
falling in the neighborhood. Visit city hall to learn about future development
plans for your new neighborhood.
Next, consider location. Assess how close the
home is to schools, your job, transportation, shopping, hospitals,
community centers, the downtown core of a major city, cultural and utilitarian
services, and the airport.
All of these factors affect price, as does the
square footage of the lot, the size and age of the house, the amenities it has,
the condition it is in, and how anxious the owners are to sell.
Look beyond the basics and have the property
inspected. Is it in a flood plane? (Again, you can check this at city hall.)
Are there cracks in the foundation, a wet basement, environmental contaminants?
Are major systems in working order? While you're not going to hire a professional
home inspector to go through the property until you've agreed on a price, you
should certainly look for major flaws.
Make sure the seller provides you with good title
through a staked survey and title insurance.
If you're buying new construction, check out
land prices. Ask the town's land planner about current zoning requirements and
any proposals to develop nearby land. Visit the developer's unfinished and finished
projects to check the quality of housing and ask neighbors if the developer
delivered all that was promised and in a timely manner.
TAKE IT AND RUN
If interest rates go down, the selling price
of a home may go up. Why? Simple supply and demand. More people will be able
to afford it. Consider the current interest rate when making your offer.
While living next to the train tracks or a busy
street may not bother you, it may bother the person who will buy the house from
you. Before you buy, consider how difficult it may be to sell this home in five
or 10 years.
Many people only want to buy homes in perfect condition.
That could make a fixer-upper worthwhile financially. When you calculate value,
assess how much work needs to be done to bring the home up to the neighborhood
standard, or just a bit beyond. Subtract that from the price you think the home
would be worth if all the work was already completed. Then, stick to your guns.
Don't overpay for a home that needs work.
