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Tuesday, March 20, 2012

What Determines the Value of Your Home?

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Basically, a home's worth is determined by its market value. How is "market value" determined? Most often, it's figured by a comparison ("comp") with homes similar to yours in the surrounding area. So, if the homes in your neighborhood average, say, $250,000, then it's likely that the value of your property will fall in the same range. But market value is also determined by a number of factors including the following: 

External Factors 

There can be several external factors influencing the value of your home. One is "curb appeal", or the first impression your property makes upon prospective buyers. A home that's in excellent condition on the outside will make a great first impression; a home in poor repair instantly loses its appeal to buyers. Other factors can include lot size, popularity of an architectural style of property, water/sewage systems, paved roads, sidewalks, etc. 
Internal Factors  

The condition of a home's interior also has a huge influence on prospective buyers. When you've demonstrated "pride of ownership" and kept up the maintenance (quality paint, trim, molding, etc.), a buyer's interest will 
immediately perk up for the simple reason that they know your care and concern will result in less cost and maintenance for them. Other internal factors include construction quality, condition of appliances, size and number of rooms, heating/cooling type, energy efficiency, etc. 

Supply and Demand 

"Supply and demand" simply refers to the number of homes for sale versus the number of buyers. When there are more homes than there are buyers, prices tend to be lower. When there are a lot of buyers chasing few homes, then prices tend to rise. In effect, supply and demand affects how quickly your home will sell. Location More than likely, you already know the old saying, 
"There are three main factors in real estate - location, location, location." While that's not the whole story, 
desirability is a big factor for home buyers. They may want to live in particular school district known for its education excellence…a great and safe neighborhood with rising property values…etc. 

But I Know My Home Is More Valuable Than a Lot of Comparable Homes in My Neighborhood

Aren't Allowances Made for This? Definitely! Sometimes, it can be difficult to find homes exactly comparable to your own. So, dollar adjustments are made for the differences between your home and comparable properties. 

Where Do I Find Sales Comparison Information? 
The easiest source to access is your Realtor. After all, it's his or her business to know such information! But, there are also other sources you can tap into in order to get a complete picture of your home's value in comparison to others in your neighborhood. Here's an overview of them:

1. ) The Local Assessor's Office

It's very likely that your local assessor will be able to provide the sales history of a particular house, neighborhood, or style of architecture. Many assessors also provide lists of recent sales which you can browse and compare to the assessment roll. Today, many municipalities provide local sales and assessment information online making it very easy to access. Check with your local government agency to find out if they provide this service. 

2.) Online Private Companies

You can search for these companies using the Google search engine and the keywords "comparable home sales" or "comparable sales." Some companies offer free information; others charge a nominal fee. If you wish to get more specific, you can Google "real estate database" and type in the name of your particular state to get additional property information. 

3.) Your Local Newspaper

It's likely that your local newspaper is a great source of specific real estate information. Look for quarterly sales reports in the real estate or business sections.

The Key to Getting the Price You Want (or Close To It) for Your Home

The key to getting the best value is finding and matching the right buyer to your home. And that's the job of the Realtor! He or she should work hard to qualify those buyers upfront so the right people are viewing your property! In other words, the Realtor should weed out "lookers" and other unsuitable buyers as a first step in working with you. See how I do that for you by calling me today!

Thursday, March 1, 2012

Market Recovery Largely Depends on How Bank-Owned Properties Are Managed

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Lately, the real estate market has been reading like the famous Charles Dickens quote “It was the best of times, it was the worst of times…” with all the ups and downs we have experienced over the past several years.  All in all, things seem to be getting better but when you compare it to the boom that feels only like yesterday to some of us, the question of recovery looms over heavily.

Why is it that the market is taking so much time to recover?  And if we can expect some better times ahead, when can we hope to break out some champagne?  The truth is that with all the rollercoaster activity ranging from national and local jobs rates plummeting, to housing values subsequently declining to record lows and a mix of scandals in between – no one really knows what’s next.

Two things, however, greatly impact how our real estate market performs and they are the economy, specifically the unemployment rate as well as how banks will handle the myriad properties they now own as a result of millions of foreclosures.

More Jobs = More Money = More Home Sales

The formula is simple.  The greater number of jobs, the stronger our housing market will be because when people have money to spend, they go out and buy things – like homes.  The bigger question is how long will it take to bring out jobs numbers back to what they were pre-recession?  And even though in many states we are seeing a slow and steady improvement in unemployment figures we still do have a long way to go.  It is also unclear what impact the 2012 election will have on job growth and consequently, the real estate industry.  Also potentially impacting consumer confidence in the near and semi-distant future is European financial markets performance.

Banks Are Expected To Unload Countless Foreclosed Properties

When the robo-signing scandal first broke out in 2010 and early 2011 no one really had any idea how it would impact the housing industry.  Now, sixteen months later banks have reached a settlement with state and federal regulators.  The money banks will need to come up with, however, will have to come from somewhere.  An overwhelmingly negative impact that looms if banks choose to unload the plethora of properties held after foreclosures will hit the housing market hard.

As they try to liquidate their properties the resultant backlash on the nation’s inventory has the potential to hurt the real estate industry severely.  Too much supply and not enough demand will end up in a property dumping ground situation that leads to even further declines in housing values.

The alternative, though not expected to be followed through with by most banks in this situation, is for them to hold on to at least some of their inventory in an effort to boost values, allowing prices to level off and ultimately resulting in market recovery.
Right now it’s anybody’s guess as to what will happen next.  And despite slightly improved unemployment numbers the Fed has decided to continue the low interest rates hoping to continue pushing our economy in the right direction. What this means for buyers is that it is still one of the best times to buy.  Sellers should consult with their Realtors to decide on an individual basis what is best for them.