Selling prices of comparable homes have been used by many homebuyers to give them an estimate of the worth of a house. Although these numbers may give you a cost estimate of a home's worth, it's essential you don't fully rely only on them. There could be special circumstances associated with the home's sale that may have driven the price above or below its genuine market value. It's essential to ask your self these important questions:
-Was the seller or buyer pressured to close quickly due to time constraints or other unique circumstances? A purchaser who has an urgent need to move in fast might pay over current marketplace value on a home.
-Did the sales price include any from the seller's furniture or personal property? If a sale included a $10,000 custom surround sound stereo system, custom window shades, extra appliances, and a complete workshop with specialized tools, most most likely the closing sales price will most likely be higher.
-Are the parties related or friends? A home sale between friends or relatives may not accurately reflect the current market value of a home. When a parent sells a home to their children, most likely it won't be for maximum value.
-Are real estate agents involved? Homebuyers and sellers who work with an sharp agent will probably be much more educated about the real estate marketplace. Their home sales have a tendency to reflect the current marketplace value of a home. However, homebuyers and sellers who handle the purchase or sale on their own tend to pay extra or too little when compared to current market value.
-Is owner financing involved? A buyer may pay extra for property if a seller is willing to assist with financing.
-When did the sale take place? Public records will indicate when a house sale closed. That date indicates when funds were exchanged and title was transferred over to the new owners. However, the date the homebuyer and seller signed the original purchase agreement could have been a number of months prior to closing.
In steady market conditions, a time lag of a few months may not affect the value of a home. However, in a volatile market, a time lag of several months can affect the market value of properties. Ask your Realtor to research the contract sales date of the comp sales you're using. Then ask your agent if the market is changing. Is there an increasing inventory of unsold homes? Are buyers offering significantly less than a home's listing price? Has open house traffic dwindled to a trickle?
By reviewing these questions, you safeguard yourself against buying property in a slowing marketplace with decreasing values. When you notice the real estate marketplace conditions shifting, it is important to spend additional time investigating past selling prices.
-Was the seller or buyer pressured to close quickly due to time constraints or other unique circumstances? A purchaser who has an urgent need to move in fast might pay over current marketplace value on a home.
-Did the sales price include any from the seller's furniture or personal property? If a sale included a $10,000 custom surround sound stereo system, custom window shades, extra appliances, and a complete workshop with specialized tools, most most likely the closing sales price will most likely be higher.
-Are the parties related or friends? A home sale between friends or relatives may not accurately reflect the current market value of a home. When a parent sells a home to their children, most likely it won't be for maximum value.
-Are real estate agents involved? Homebuyers and sellers who work with an sharp agent will probably be much more educated about the real estate marketplace. Their home sales have a tendency to reflect the current marketplace value of a home. However, homebuyers and sellers who handle the purchase or sale on their own tend to pay extra or too little when compared to current market value.
-Is owner financing involved? A buyer may pay extra for property if a seller is willing to assist with financing.
-When did the sale take place? Public records will indicate when a house sale closed. That date indicates when funds were exchanged and title was transferred over to the new owners. However, the date the homebuyer and seller signed the original purchase agreement could have been a number of months prior to closing.
In steady market conditions, a time lag of a few months may not affect the value of a home. However, in a volatile market, a time lag of several months can affect the market value of properties. Ask your Realtor to research the contract sales date of the comp sales you're using. Then ask your agent if the market is changing. Is there an increasing inventory of unsold homes? Are buyers offering significantly less than a home's listing price? Has open house traffic dwindled to a trickle?
By reviewing these questions, you safeguard yourself against buying property in a slowing marketplace with decreasing values. When you notice the real estate marketplace conditions shifting, it is important to spend additional time investigating past selling prices.
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