What Is A Home Worth?
Several factors, including the state of the real estate market, property location and condition, and interest rates, contribute to a homes worth. Ultimately, a home is worth what someone will pay for it. All homes have a price, and sometimes more than one. There is the price the owners would like to get, the value buyers would like to offer and a point of agreement, which can result in a sale.
When considering home values, several factors are important:
- The value of a home relates to the local sales market. The exact same home in a different neighborhood may likely have a different value.
- Supply and demand is also a determining factor of home values. A home located in a community with an expanding employment base, growing population and limited housing, will see more appreciation. Homes located in an area that is seeing a decline in jobs and many homes for sale will create more of a buyer's market.
- A homeowner's motivation for selling can affect a home's value. If an owner must sell quickly, then he/she will have less leverage in the marketplace.
- Home value is not determined by the homeowner's needs. If the listing price is based upon the seller needing certain proceeds, and not on the marketplace, a too-high price can be the result. When a home is overpriced compared to similar homes in the same area, buyers will quickly decide that the home is unfairly priced.
- The list price or offer price is only one part of the deal. Consider all that is being offered. A home that is listed a little higher may include seller concessions that make the home more affordable for a buyer. In some cases, an offer from a buyer may be at a higher price, but include; allowances for repairs, discount points or contributions to closing costs, or longer terms, etc.All real estate transactions are unique and there is almost always flexibility in the marketplace. How much flexibility depends on local conditions.
- List Price
The list price is how much a property is advertised for and is usually only an estimate of what a seller would expect to receive for the home.
- Sales Price
The sales price is the amount a property actually sells for. It may be the same as the listing price, higher or lower, depending on market conditions and how accurately the home was originally priced.
- Comparable Market Analysis
A CMA is an informal estimate of market value, based on the sale of comparable properties, prepared by a Realtor?. This report will compare recent sales of homes in the same neighborhood, of similar size and style. Most Realtors? will provide you a Comparable Market Analysis free of charge.
This report is a certified appraiser's estimate of the value of a home at a given point in time. Appraisers consider several factors when determining a home's value, including the home's size and square footage, the condition of the home and neighborhood, comparable local sales, any pertinent historical information, sales performance and indices that forecast future value. Appraisers also take lot size, topography, view and landscaping into account. Appraisals usually cost between $300 and $350.