to consider in valuing a home :
Two things to consider in valuing a home:
The Zestimate® home value is a good starting point in figuring out the value of a home. It shows you how the home compares relative to others in the area, but you then need to add in all the other qualities that only someone who has seen the house knows.
Knowing whether an asking price is fair will be important when you’re ready to make an offer on a house. It will be even more important when your mortgage lender hires an appraiser to determine whether the house is worth the loan you’re after.
Check on Zillow to see recent sales of similar, or comparable, homes in the area. Print them out and keep these “comps.” You’ll be referring to them quite a bit.
Note that “recent sales” usually means within the past six months. A sales price from a year ago probably bears little or no relation to what is going on in your area right now. In fact, some lenders will not accept comps older than three months.
Market activity also determines how easy or difficult it is to find accurate comps. In a “hot” or busy market, you’re likely to have lots of comps to choose from. In a less active market finding reasonable comps becomes harder. And if the home you’re looking at has special design features, finding a comparable property is harder still. It’s also necessary to know what’s going on in a given sub-segment. Maybe large, high-end homes are selling like hotcakes, but owners of smaller houses are staying put, or vice versa.
The elements most critical to an accurate comparison are:
Sometimes, unknown or unexpected circumstances can skew prices:
If you’re working with an agent, you may find yourself experiencing some upward pressure: “Yes, it’s priced a little higher than you were looking for, but it’s got [pick one: an extra bedroom, a really great backyard, a family room, a pool].”
To be fair, first-time buyers, and even experienced buyers, can apply this pressure all by themselves: “Gee, look at this one: For just a little bit more we could get …”
Amenities such as new wall-to-wall carpet or a swimming pool might be a real selling point for some buyers. If you’re not one of them, you need to make this clear to your agent.
For one thing, you’ll establish that you’re serious about your budget. It will also help the agent negotiate for you later. The new carpet is actually a negative if you’ll want to tear it out to get to the hardwood floor underneath.
Also, be sure to compare the listing description to what you see. Is everything there that was promised? Do those new appliances come with the property, or are they leaving with the seller? This can mean the difference of several thousand dollars in upfront costs to you.
Question anything that’s not clear. Sometimes a listing will say something like, “square footage doesn’t match tax records.” What does that mean, exactly? Is there an addition that was made without permits, for example? That might be OK for now, but how will that affect the resale value of the home?
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