Five ways a home is valued
The other day my client asked me, “Shima, how much money can I get for my home?”
I told him that when a potential buyer is inspecting the value of a home, several factors come into play. Although the market has a huge impact whether a home will sell quick or slow, there are some indications that are always considered.
First and foremost, LOCATION!
One of the most influential factors a buyer will consider when deciding whether to purchase a home or investment is geographical location. You’ve heard it, seen it and even said it, “Location, Location, Location!” Proximity to attractions, transportation routes, schools, demographics, ocean views, fine dining and freeways are all advantages one may take into consideration when assessing the value of a home or business’ location.
Second, PRICE!
In 1950, Pepsi used the slang, “More bang for the buck” as an advertising method to describe the New Look policy on nuclear weapons. Today, the phrase is used to mean a greater worth for the money used.
We all love a great deal, especially in one of our greatest investments we will ever make. People want to know that they’re getting more than they imagined they could ever have and that happens when they feel like the home was a steal. Well, how does this occur?
When a home is strategically priced, people line up, wanting it before it’s gone. And the way to do that is to make sure it is priced to sell!
Third, knowing who is your COMPETITION.
When pricing your home, it’s vital to look at what is currently active, what is pending, what has a backup offer, and what has closed. The active listings are who we are competing with. The pending sales are necessary to see how many days something has been on the market until it has gotten an offer. Closed Sales will test us exactly where our comps will come from- which is typically between the lowest and highest sales.
By understanding WHO the competition is, it is easier to focus on what you have to offer that the others don’t- and that is your power.
Fourth, the CONDITION of your home.
Again, a home or business is a huge investment one makes and the condition will either influence or scare some away. What may seem like a potential fixer to some, may seem frightening to others. So, the condition of a home will influence one’s decision in determining if they will get more bang for their buck!
Last but not least, the CURRENT MARKET.
Current market conditions are gathered from interest rates, stock market, gasoline prices, election-year distractions, global events, and other things going on around us that we basically have no control over. These factors plus seasonal things such as income tax time, holidays, add an unpredictable element to home sales. However, over time, the trend is always upward! As my friend and business partner Tim Marshall says, “I have a saying that the best time to buy is now and the best time to sell is now, because in the long run the trend is always upward.”
As previously mentioned, we all love a great deal. To some, a deal may be getting furniture with the home, a free TV or fridge. To others, it’s simply getting more bang for their buck- which is really just getting something better for the same price.
So when deciding what to price your home, remember these determining factors that will ultimately influence a buyer’s decision. Remember, we’re all out to get the most bang for our buck!