Perspective buyers and sellers likely pose these questions:
• What price should I list my house at?
• How much will it cost to get my dream home?
• What is the value of my home?
Even though, logically, these questions appear to all have the same answer, the truth is not as simple.
Each home has a price, a value, and a cost. Knowing the difference between the three could help you sell your house much quicker or, conversely, help you get the most bang for your buck when buying a house.
Regardless of whether or not you’re a homebuyer or seller, you can do yourself a big favor by doing the proper research before getting involved in the real estate market. The proper research involves familiarizing yourself with the steps in a transaction in addition to gauging the list prices for homes in your market. You should also be honest about your physical and financial needs.
(If you are in the San Diego area and need a real estate agent, contact me, and I’d love to help you with this process.)
Let’s discuss the difference between price, value and cost when it comes to real estate.
Price of a home
Price of a property is defined by the seller. Price is how much your home is worth today and that is best determined by figuring out its fair market value.
The best way to research this would be to see what recently sold houses, in similar sizes and up-keeps, went for in the past six months. Other variables that can affect the price of a listing include location, surroundings, and views. A proper Comparative Market Analysis (CMA) should include all of these variables and more, giving you the best idea of the right price for your home or perspective home.
This might not be an exact science, but at least you’ll have a better idea than someone that didn’t do the proper research.
A home’s value
Unlike price, property value is established by homebuyers. How much someone is willing to pay for a house defines its value. Since value is
determined based on a person’s lifestyle, it can be different for everyone.
A good example would be a property’s proximity to public transportation. A person that uses public transportation would find that home more valuable than someone that does not.
Cost is defined by how much someone spent on a home to purchase it plus any renovations that were done thereafter.
Logically, the more you spend on a home, the more its value should go up; however, that isn’t always the case. These renovations or improves may or may not improve the overall value of a home.
Remember, value is defined by the homebuyer and not the seller. The homebuyer will subjectively determine if any improvements actually increase the home’s value, regardless of the cost.
Contact a real estate agent
The key takeaway from this article is that the value of a home is subjective because people are subjective. Regardless of how much is spent on a home or how much it was originally purchased for, homebuyers will assess the true value of a home based on how much they are willing to pay for a given property.
The best thing you can do is get yourself as much information as possible and the best way to do that is to hire an experienced real estate agent.
Hedy Goldman has lots of knowledgeable information to share. She has been practicing real estate since 1996 and is a 2010 gold award winner at Windermere Real Estate SoCal. Hedy sells all over San Diego, but specializes in North County Coastal. She can be reached at (858) 504-2334 or San Diego Realtor.