Buyers must look at the many internal and external factors that determine the value of a home. Obtaining a professional inspection is obviously very important; however, customers need to examine the home on their own in order to determine if the property is worth the current asking price.
An initial inspection outside of a professional helps the purchaser place an accurate opening bid price to the seller.
Buyers overlook some very important factors that determine the true market value of a property.
The condition of the neighborhood and the current market values within the neighborhood are two of the biggest factors that are often overlooked.
- Potential buyers must inspect the entire neighborhood and get a feel for the type of people who live in the community.
- Look at the condition of the homes and learn how the condition of homes located near the primary property affect market values.
- Find the sales price of three similar homes in the neighborhood that sold within the last year.
- Match the sales price of the comparables to the current asking price of the home under consideration.
Comparables are a great way to determine if the sale price of the subject property is in-line with current market values.
It is important to find out how many days the property has been on the market. If a property is on the market for 30 days or more at the initial sale price, the seller becomes more flexible with offers that come in under the initial sale price.
Real estate agents or mortgage brokers can easily access the most recent “days on market” information for the subject property.
Length of ownership is another important point to consider when properly evaluating a home.
Find out how long the seller has owned the home, and most importantly find out what the seller initially paid for the home. The sellers initial purchase price gives the buyer important information regarding how much property values have increased from the initial purchase date. This helps determine how much property values may increase in the future and the amount of profit a buyer can expect to make if they decide to sell the home in the future.
Future home values are just as important as present home values if any buyer plans to extract equity from the home during the course of ownership.
The tips described are commonly referred to in the real estate industry as external variables.
External variables are just as important as internal variables when determining accurate property values. However, many potential homebuyers overlook there importance, and stick with internal variables like plumbing, structural issues and curb appeal. The tips listed are sure to help inexperienced homebuyers make an informed decision on whether or not to take the home all the way to the closing table.