Buying a new home is one of the most expensive decisions that most consumers ever make. Researching the issue is the proactive way to find a great value in the real estate market. Because value, cost and price are different for each property, they are the three most essential aspects of a purchase.
In a recent broadcast of “Eye on Real Estate with Dottie Herman”, she discussed the three most important factors to buying a home. Herman is the president and CEO of Prudential Douglas Elliman.
Value is what a person thinks a home is worth based on their intended use. Because individuals have their own lifestyle and needs, some buyers will pay more for certain features.
Consider the purchase of a prime piece of Brooklyn real estate. Some buyers enjoy the outdoors, and they may want a home that is close to the ocean. Other buyers rely on public transit to get to work, and they are willing to pay more for a home that is a short distance from the train and bus lines.
Most sellers make the false assumption that the cost of their home is the amount that was originally paid plus the cost of any improvements that have been made to the property. This is a mistaken assumption that is based on issues of the past. Because the true selling price of a home depends on a buyer’s individual valuation, cost is not really the amount of money that has been poured into a home over time.
Home improvements are a great way to add value to the home, but it is essential that they are done with an eye towards the buying public. It makes no sense to pour thousands of dollars in a home by adding twenty bathrooms. This may increase the cost of a home, but it does not really add to the sale value. Buyers are also trying to get a bargain, and they are more satisfied when their valuation is greater than the cost that they pay.
The price of a home is what it should be worth on the open market. Because individual buyers have their own valuations, the industry relies on a fair market value. The fair market value of a home is usually based on similar properties that have been sold in the past six months. It is important to keep in mind that the amount of time a home is on the market is a component of price. Motivated buyers are more than willing to sell for less if they can attract an immediate buyer. Other sellers are happy to wait to ensure the maximum sale price on their home.
In addition to value, cost and price, there are other factors that affect a new home purchase. Location, view, schools and neighborhood are all important issues in today’s market. These issues are out of seller’s control, and buyers should be comfortable with their home’s intrinsic features.
Dottie’s episode makes it clear that buying a home is a huge task. Researching the issue makes the process fun and ensures that buyers are satisfied with the most expensive purchase that they will ever make.