|Does Affect||Value||Does Not Have an Affect on Value|
| Location|| Condition and quality of construction|| Price paid for the home|
| Size|| Property size|| Cost of improvements/renovations|
| Style|| Supply and Demand|| What it would cost to build today|
| Improvements/Amenities|| Mortgage Interest Rates|| What the mortgage balance is|
| Age|| Mortgage Financing Availability|| What you are spending for your next home|
Some of these factors are within the control of the owner, and others are beyond the control of the owner, whether the home is in Iselin, Edison or Colonia, New Jersey, in Wilmington, North Carolina or in any other area and State.
The definition of Fair Market Value includes various terms such as: the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale; the buyer and seller each acting prudently and knowledgeably; assuming the price is not affected by undue stimulus; normal marketing time period, informed buyer and seller.
In helping owners obtain a Market Value estimate for their home, REALTORS® can provide a Comparative Market Analysis (commonly referred to as a CMA). A REALTORS® CMA is not an Appraisal, and should NOT be interpreted as such.
A thorough Comparative Market Analysis should include full property details and pricing information of the most comparable type properties:
* currently listed on the market for sale
* recent pending or under contract sales, those homes where a contract offer has been signed
* recent closed sale transactions
* expired listings, those that did not sell during the marketing time period
* withdrawn listings, properties that were taken off the market by the owner and are no longer for sale
The purpose of a report like this is to provide the owner with factual, detailed information regarding similar properties to help homeowners in their decision to sell by providing a recommended asking price and estimated sales price. While no two properties are truly identical, an analysis like this can provide homeowners with the most reliable method of obtaining a market value estimate for their home.
In the process of reviewing the pricing information however, it is quite common for owners to question the market value estimate and pricing recommendations offered by their REALTOR®. Sometimes, the questions and concerns they have about price, while valid in their particular situation, do not have an affect in determining the market value for their home.
Real estate ownership has been blessed with appreciation in home values over the years, but that appreciation is not always in a straight line. Real estate values are not static. Over the long term, an investment in real estate is generally considered the most valuable type of investment, one with the best financial returns. Over the long run, it is probably the best investment people can make.
Depending on the market conditions when the home was purchased, some owners were fortunate and purchased in a buyers market before the increases in real estate values between 2001 and 2006. Others may have bought at the end of a strong real market and were forced to pay top dollar in a highly competitive sellers market, as many buyers have experienced who purchased their home in the time period between 2016 and 2020 in most real estate markets. It is economic market conditions, the economy, employment, mortgage interest rates and supply and demand that create changes in the real estate market and cause real estate values to increase, remain stable and perhaps drop at different periods of time. These are the factors that are beyond an owner’s control.
All owners would like to get the price they feel they should get for their home when they choose to sell.
The reality is, their home is worth what it is worth, and that is the price a qualified buyer is willing to pay. Yes, there is a Buyer for every house, but every house has it’s price. A buyer will not pay more for a home than what they would have to pay for another home with similar features and amenities in a similar location, something called the “Principle of Substitution”.
It is for that reason why so much reliance is placed on sales data when establishing market value, and not personal emotions or personal circumstances.
…Supply and Demand… and …Mortgage Interest Rates…
Fast forward to 2020 and the year of the Pandemic. There are geographic locations where real estate values have increased upwards of 10% and even 20% just in the 2nd half of 2020 due to historically low less than 3% mortgage interest rates, multiple offers, bidding wars between Buyers, pent up Buyer demand, a shortage of available homes for sale and the mad dash of Buyers and Renters to the suburbs searching for larger homes with more room to work from home and the desire for outdoor space. Yes, “searching to purchase a home has become a Job and an Adventure” for Home Buyers throughout this Pandemic!
Yes, the “Perfect Storm” for Home Sellers!
Yes, this is a real estate market that is a Home Seller’s Dream… a real estate market where Buyers are more than willing to pay more than what the other Buyers are offering just so they get the home and can put the search for a home behind them!
This is a real estate market I have not witnessed in the 49 years of listing and selling real estate!
The above article, “Home Sellers: Arriving at the Value Estimate_Part 1”, was written by David Fialk, Realtor Emeritus, who regularly posts real estate articles of interest for home buyers, home sellers and homeowners.
Licensed Since 1971, David Fialk is Licensed Real Estate Broker Salesperson in North Carolina (Intracoastal Realty, Wilmington 28411) & New Jersey (Coldwell Banker Residential Brokerage, Metuchen 08840) and has helped more than 1800 Families Move across Town… Throughout the State… and Across the Country!
Planning on purchasing real estate? Thinking of selling your home? For real estate information “You Can Rely On, Contact the REALTOR You Can Rely On”.
David can be reached via email or by phone at 910-859-0200 or at www.DavidFialk.com.