Thursday, July 19, 2012

A Closer Look at the Real Value of Real Estate

I am honored to present the following piece co written by Megan Gates, Dottie Herman and myself.

A Closer Look at the Real Value of Real Estate By Megan Gates

Additional comments by Mark Slade

When buying a new home, your goal generally is to get the best home at the best price possible. To accomplish this, research and education are key. A home is, after all, a major investment on your part, and it also is a place where you may live for many years or even decades. Through knowledge of the real estate market and the overall buying process, your transaction may yield better results for you.

Hiring a real estate broker is a great step to take. A real estate purchase is a legal as well as a financial transaction, and a broker is a professional who has received professional training in these areas. More than that, a broker has knowledge of the market and experience walking through the buying process that can be of tremendous value to you. A broker can help you to find a home that has worth to you in multiple ways. However, hiring a broker is not a substitute for your own personal education about the market and the buying process. “When I work as a buyer’s agent,” says Mark Slade Realtor Keller Williams, “my job is to provide my clients with as much insight and education I can in the form of analysis, etc. I particularly like to show them a couple of homes above and below their criteria in order to help them hone in on the current market value in a neighborhood.

One of the biggest factors that home buyers have concerns about is buying a home at the right price. Many real estate transactions have gone south at the last minute because the appraisal came in with a value that was slightly lower than the negotiated sales price and/or some home inspection comments may have given rise to buyer’s remorse about the price they are planning to pay for their new home. Buyers don't want to pay more than the property is valued at, and sellers have a perceived value in their minds for what their property is worth. Before you buy a new home, it is important to educate yourself on the variations of value, price and cost.

The Value of a Home

Real estate expert Dottie Herman, CEO and President of Prudential Douglas Elliman, was featured recently on a radio broadcast of “Eye on Real Estate with Dottie Herman.” In the radio broadcast titled as “The Art of Negotiations,” Herman stated that value is simply your own opinion of the property's worth, and it is “based on how you're going to use it.” One buyer may value a property differently than another based on unique property attributes. For example, a location in a great school district may make a property more valuable to a family with kids than to a retired, empty nest couple; similarly convenience to a commuting train station, highway, airport may also dramatically influence a buyer’s perception of value. Mark Slade goes on to say that “In Maplewood, its fairly common to see a premium price paid for similarly sized homes when they are within ½ of our Mid-Town Direct Train Station.

The Cost of Real Estate

The cost of real estate is a valuation that sellers place on their property. Many sellers look at the cost of their home as the sales price they paid originally as well as the cost of all improvements they have made to the home over the years. Herman states that the definition of cost is “a measure of the past.” When reconciling cost and value together, though, these are not always equivalent. According to Herman, “Cost and value are not what the price of the home should be or shouldn’t be.”

The Price of Real Estate

The price of real estate generally should be equivalent to the fair market value of the property. This price is generally determined by a broker or in a CMA (Comparative Market Analysis.) The CMA is based on the broker's research of comparable sales in the local area over the last six months. However, the CMA only takes into account sales prices, dates and square footage of the properties in most cases. The fair market value of a CMA does not take into account specific factors that may have resulted in price negotiations. Some factors that may affect the final sales price of a particular property include the overall condition of the property, the neighbors in close proximity to the home, the view, the location and more. “As a Otteau Valuation Group trained ACMA—Advanced CMA--provider, I often provide a detailed analysis of a home’s value to my clients so as to help them see the differences beyond simply judging by their own experience and emotions,” says Slade.
In the above example, I valued a home at $667, listed it for $675 and had an offer for $680 in 8 days.

A potential buyer can drive to properties listed in a CMA to estimate factors that may have affected the final negotiated price on a specific piece of real estate. It is important to note, however that the final price of real estate is affected by a specific buyer's valuation of it. Slade states: “Eventually economics comes into play with Supply (the Cost of Real Estate) and Demand (the Value of a Home), with an expectation that every house will find the right price where demand and supply meet and the seller finds the right buyer.”

According to Herman, “There is no exact science to pricing.” Through your own education about how real estate is valued, worth is placed and price is determined, you can more easily determine what a specific property may be worth to you. Working with your real estate broker and researching the market in detail can help you to get a great property at a great price.

Mark Slade
Keller Williams
Good Homes

Selling a Maplewood/South Orange/Millburn/Short Hills area home involves many steps and having an experienced Maplewood New Jersey Real Estate Agent and Realtor®, specializing in the Bedroom Communities of New York City in Essex/Union County— Millburn, Short Hills, Montclair, West Orange, South Orange, Livingston, Maplewood, Springfield, Summit, Madison, Chatham, Scotch Plains, Fanwood, Cranford and Westfield--by your side will make the transaction run a lot smoother. I would love to be your Maplewood/South Orange New Jersey Area Real Estate Professional! I assist both buyers and sellers in the Bedroom Communities of New York City, mostly served by NJ Transit’s Mid-Town Direct Train Lines, offering commutes of 45minute or less to NY Penn Station, with either the purchase and or sale of residential real estate.

As an Accredited Buyer’s Agent (pending), I have received special training to guide and educate you through the entire home buying process. From start to finish, I listen to your needs and desires in what you would like and take the information you give me to find you home. My GO-TO team can provide you the best in Real Estate advice with regard to attorney choices, Home Inspectors and Mortgage Loan Officers

As your Maplewood/South Orange/Millburn/Short Hills/Essex/Union County New Jersey listing agent I am well versed on as your local expert in all things in the Maplewood and South Orange area Real Estate Market. You can expect personalized service that includes a detailed consultation on how to best position your Mid-Town Direct home to be competitive in today’s market with training to provide my clients with an in-depth Advanced Comparative Market analysis, and advice on staging. As my office’s technology officer as well as both a Zillow Platinum Premier and Trulia Premier agent, I use the latest and most up-to-date marketing methods to get your home in front of as many buyers as possible. Being your New Jersey Real Estate Agent and Realtor ® not only involves just finding the home or selling the home, but being your guide, negotiator, advisor and advocate and making sure that your needs and goals are met. Being your New Jersey Essex/Union County area Realtor® (with a little bit of Morris Cty thrown in for good measure) is one of my truest passions, and “Helping You Find Your Dream Home” is my number one priority.

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