To learn about real estate values, visit my page specifically designed for homeowners . You'll learn the process of evaluating your present home. But if you're also a buyer, this page may also help with your quest.
If you're planning to make an offer on a home and you'd like some idea of a home market value before taking the leap, then read on.
you're just beginning your search and would like some idea of specific
house values, or real estate values in general, and what your money
will buy, a really great place to start is where an ever increasing
majority of buyers begin -
REALTOR.ca in Canada and
REALTOR.com in the United States
By inputting your basic search parameters and surfing the many listings from the comfort of your den, you'll be able to establish a pretty good idea of what you can buy. It's also wise to seek a mortgage pre-approval even before you start surfing. At least that way, you'll know your maximum affordable purchase price. Just add your maximum pre-approved mortgage loan amount to your down payment saved. The result is your maximum affordable purchase price. I found, however, that many buyers, to be wisely comfortable, rarely buy to their maximum approved amount.
Plus if you've been visiting open houses and watching the local real estate paper, I'm sure you'll have a glimmer about real estate values in your target area.
If you've been viewing homes already, and found an affordable one that raises your blood pressure and you're ready to ...
... I suggest you rely on your realty agent to provide their expert opinion. If they're experienced in the area, they'll have some idea of house values before they even begin their specific research. And if you've entered into a Buyer Representation Agreement (BRA) , thereby making you a client instead of a customer, your agent can easily produce for you a ...
... for your target home. This is a report which compares the subject property with currently active and recently sold and expired listings of homes similar to the home on which you intend to offer. It's exactly the type of information that a seller is normally given when their home was evaluated by their agent.
Though highly unusual for a buyer in a residential real estate situation, you could hire a appraisal company that specializes in ...
To determine real estate values, they typically use the same CMA methodology as your agent. The difference is that it's performed by an appraisal specialist. Having said this, the value they report will be an appraised value, which may differ from what is referred to as Fair Market Value (FMV).
Expect an appraisal fee of several hundred dollars, but you'd have a written professional report on which you could base your offer price (which a seller can certainly ignore). And of course, if your offer negotiations fail, you've lost the appraisal fee. Due to the expense and the time delay, this uncommon method would be more suitable to unique and substantial properties with few, if any, comparables. Or if you're attempting to ...
... without professional guidance, both the seller and the buyer could hire their own real estate appraisers and then average the two opinions to determine the sale price.
In their efforts to protect your interests, your agent has probably eliminated any over-priced properties from the viewing selection. Thus, any properties you view will likely be listed fairly.
Now you're armed with an estimate of home market value. Typically, at least for Toronto real estate and the surrounding area, at the time of writing, good listings were selling at a price that was within 3% of the list price. Your area may be a little different. Depending on market conditions, though, sale prices could be considerably lower or even exceed the asking price, especially in a multiple bid situation. At this point in time, your agent's opinion regarding market conditions and real estate values in your area is invaluable.
Since a bit of ...
... and obviously depending on your agent's opinion, consider offering a price that is maybe 5% under list, assuming the list price is reasonable. More often than not, the seller is going to counter-offer back to you at what is often the ultimate sale price. If, in your view, they're being unreasonable, you can certainly counter their counter-offer. But in my experience, this is uncommon.
Factors to consider when determining the amount of your initial offer are the other ...
How many conditions do you need? Are you asking for valuable fixtures or chattels not listed as being included, or are noted as negotiable? Do you require a condition allowing you the opportunity to sell your present home? Is your offer cash and firm, that is no conditions whatsoever? Can you give the seller their preferred closing date, or do you require a different date?
The more you're able to accommodate the seller's demands and the fewer conditions, the more the seller will be inclined to be reasonable - unless, of course, their subjective expectations are located somewhere in the stratosphere.
In order to get the best price possible during negotiations, you must be prepared to ...
This philosophy holds true whatever large ticket item you wish to purchase - houses, cars, boats - whatever.
With appraised value aside for a moment, learning real estate values is not a simple task without professional guidance of some type. Nobody can accurately predict fair market real estate values. Why? Because they're determined by way of the negotiation process. Unilaterally assigning a figure would be like trying to nail jelly to the wall or herding cats.
Appraised value can be different from a market value because the former
is based on cold, hard mathematical calculations. For market value, even
though comparable sold properties are considered, emotion plays a substantial role. The process is a little more warm and fuzzy.
The real estate values and ultimate sale price
of a property is subject to the Law of Supply and Demand. For example, an increase in
the supply of listings in, or a decreasing demand for, homes in any given category will have a negative impact
on house values in that category. Of course, the opposite also holds true.
When all is said and done, the final sale price is fair market value.
To help you determine real estate values, work with an honest, experienced realty agent.
Whether buying or selling - with or without professional help - check out my book The Happy Agent. It contains the sum total of the real estate knowledge, philosophies and techniques that I've accumulated, practiced and polished during a highly successful 40-year realty career.
Learn how to effectively
evaluate a home before offering, or how to evaluate your own place and prepare it for market to maximize the ultimate
sale price. There are also lots of ideas on how to
market and advertise effectively, how to handle showings and open houses
like a pro, how to
successfully negotiate an offer, whether buyer or seller, and more. You'll also learn how to recognize the signs of when it's
time to throw in the
towel and hire a professional, and what to expect from them.
When you consider that you're dealing with arguably your largest financial asset, and if selling, the huge
possible savings in
real estate commission with a private sale attempt, a small
investment of your time and a pittance of your
money could save you thousands of dollars and a ton of heartache. At the very least, you'll be
encouraged to try it alone, at least for awhile. Remember - knowledge is power.
Available virtually everywhere print and e-books are sold.