In the real estate market, value is a continuously changing concept. Value at any given moment is based on what a buyer is willing to pay and a seller is willing to accept. This amount is influenced by market condition and personal situations. Market conditions are determined by overall national, state, and local economic conditions including interest rates on loans and employment factors. Personal situations include income, credit, local neighborhood desirability, condition of the property, and costs associated with owning it. There is also the fact that every home, lot, and building is different.
For these reasons it is difficult to answer the question, "How much is it worth?" The only certainty is that value is in the eye of the beholder. True value does not lie in the asking (listing) price although that is what a seller wants a buyer to believe. In fact, the listing price of a home often has nothing to do with its market value.
So whether you are a buyer or a seller, figuring out how much a home or a building lot is actually worth is a subjective process. You'll have to do research, make calculations, and spend time learning to recognize relevant factors. You should start by discovering the prices that properties with similar characteristics sold for recently in the same area. This method is called a Comparative Market Analysis or CMA and your Realtorâ can provide one for you.
After you have done a CMA you should adjust that figure upward or downward according to your personal preferences. For example it's especially important to factor the location into your valuation formula. Where a home or lot is located within a city, within a neighborhood, on a particular street, or within a single building, is crucial to determining its value. Think about where the property is located in relation to the entire neighborhood. Are shops and various services within walking distance? Is the house convenient to major forms of transportation and to the schools your children will be attending? Is it too near high noise and traffic streets? For example: Many families want to be within walking distance of the local public school, but they prefer not to have their backyards adjacent to the school playground or a main road. Next, think about where the house is located on its block. Is it on a corner, or on the interior row? Is it next to or near a high-rise building or apartments or condominiums? Are there many homes just like it on the block? Does the block have a nice residential feel or is it mixed residential and commercial? If it is in a subdivision with many homes, is it close to the entrance of the subdivision, or do you have to drive several blocks to get to a main road?
If you're considering a townhouse, condominium, or co-operative apartment start by asking yourself about its location in relation to shopping and service retailers. If the townhouse is located within a group of buildings, compare its location with the premium location within the complex. Is it near the pool and clubhouse and how far away must you park your car? Is it better to be located on the perimeter, or is an interior location better? Are end units more prized, or are middle units preferred? Do you have to walk far to your mailbox or trash collection bin? If your condo or co-op is located in a high-rise building you also need to consider where the unit is located in the building. If one side of the building has a fabulous view and another faces a windowless brick wall, you can be sure that units with the full view will be more prized than units without a good view. Which is more important to you, the lower cost or the better view? Usually a unit with the best view will appreciate faster than a unit with only a worse view, even if the less attractive view is larger and has more amenities.
If you are buying or selling vacant land, the value can be materially affected by zoning and land use regulations. What are you allowed to use it for? What kind of home or commercial building can you construct on the site? Will the road or street be paved or widened soon? What are the setbacks and drainage requirements? What is or will be built on adjacent and nearby lots?
As you can see, location alone has a great deal to do with value. However, there are almost always many other items to take into account beyond location. If you are a seller, once you have a value in mind you are ready to determine an asking price. If you are a buyer, once you do have a value in mind for a particular property you are ready to make an offer. Your Realtor® can help you with the gathering and evaluation of all of the information and the specific steps necessary to successfully buy or sell your property.
Mark Cohen
Broker
Eyemark Realty, Inc.
Gainesville, Florida
www.EyemarkRealty.com
www.GainesvilleFloridaHomes.com