Everyone who owns a home typically likes particular aspects of that home. But these likes and dislikes have less to do with value that you might think, so let me give you some value-thoughts to chew on:
* Value is a moment in time, and is based on what else buyers can buy, the day they go out and look at your house.
* Prices are not forever, because values are fluid. They go up, and they go down, depending what other sellers do with their prices.
* Value is never an isolated concept, its always relationship concept, value in relationship to what other people buy.
* Agents and Sellers set prices, but buyers determine value. This is critical because we can set prices all day long, but we don't have any control over the market. The buyer will tell us if the price is right.
I often times find that home owners do not know how home values are determined and I find that one of the biggest roles that real estate professionals have is to continuously remind our Sellers of this. When somebody decides to sell their home, they think about what they want for it and they think about what they will do with the proceeds. Unfortunately, none of the buyers for the home care.
Some of the key things seller's think about that buyers do not consider important ?
What does not affect value?
* What you paid for the house
* Your remodeling costs
* The amount of cash you need to buy your new house
* What you want for your house
* What I say your house is worth
* What other real estate agents say your house is worth
* What an appraiser says your house is worth
* What the tax assessor said your house was worth
So, how do we know how home values are determined? They are determined by what a buyer is willing to pay in today's market, based on the comparison of your house with others on the market, both here and in other neighborhoods.
(Analogy: Buyers don't just say? I'm only going to buy in the Golden Eagle Subdivision in Tallahassee.? They don't look just in the Golden Eagle Subdivision; they look at a larger category of inventory, across many subdivisions in Tallahassee. They screen price range, bedrooms, bathrooms, school zones, etc.)
Who determines value?
BUYERS - I have never, ever spoken with a buyer who said, ? I don't like that house on Elm Street, but let's go look at comparable properties to determine its value.? Buyers don't care about comparables (nor the value of your home) unless they like your home. The most critical data you can operate off of when determining the value of your home is from the homes available in the marketplace the day the buyer goes out and shops.
UNDERSTANDING COMPETITION
People with their homes on the market are competing with the other people and builders who have homes on the market. The number of Buyers is limited and you have to be the best deal if you want your home chosen. Do not ever misunderstand that you are in a race; a competition to attract the best buyer for your home!
UNDERSTANDING CHANGE DYNAMICS
If the market changes tonight and your competition all drop their prices $5,000, then you wake-up tomorrow over-priced. And you have to do something about it. This is the concept of ?value is a moment in time.? Do not ever think that you have ?set? the price on your home and that you do not need to pay attention to value movements in your marketplace.
WHY DOES EVERYONE TALK ABOUT COMPS?
?Comps? is a real estate industry term, short for comparable property sales in the past, that many people errantly rely on to determine value. The critical error that they make is the assumption that markets don't go up and don't go down! BAD ASSUMPTION! No other commodity works that way! Why would houses?
Staying Calm When Home Values Drop
The real estate market can be looked at in two ways. First, you can look at the movements on a monthly or annual basis. When doing so, you will see moves up or down and perhaps stress yourself out far more than necessary. Alternatively, you can look at prices on a long-term perspective of five years or more and predict where they will go based on historical trends in real estate. By far, this second approach is the way to go when it comes to viewing the value of your home.
Unless you live in Texas or Colorado, there is no denying that you have probably seen significant appreciation gains on your home over the last ten years. The market has been about as hot as it ever has. Properties in Las Vegas, for instance, were appreciating at a staggering rate of twenty-five percent or more a year. A YEAR! On paper, a lot of people became millionaires because of the equity gains in their home. As always, such growth could not be sustained inevitably.
The gains you have made over the last five years or so appear to be under attack at the moment. Across the nation, we are seeing a pull back on home values because of a cooling real estate market. It is important that you don't overreact to this pull back. The gains you have seen in the last few years were paper gains, to wit, they did not put money in your bank account unless you pulled money out of your home. As home values cool, it is important to realize any loss of equity is also a paper loss, to wit, you aren't paying anything out.
A map of real estate prices over the years would show a continual up trend. Yes, there are variations over a two to three year period, but the overall trend is an increase in property values. There is no reason to believe this will change anytime soon. The current pull back on property values will pass and your home will start appreciating again. It may take a year or two, but it will happen. Relax!
If you are seeing a pull back on the value of your home, you should not sell unless there is some other compelling reason. Practice patience and you will see prices rise again in the near future.
Both Joe Manausa & Raynor James are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Joe Manausa has sinced written about articles on various topics from Sell Home, Real Estate and Sell Home. Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the or on t. Joe Manausa's top article generates over 4400 views. to your Favourites.
Raynor James has sinced written about articles on various topics from Real Estate, Business and Finance and Debts Loans. Raynor James is with the site - FSBOAmerica.org - homes for sale by owner.. Raynor James's top article generates over 90500 views. to your Favourites.