Let's take a moment and touch on a subject not many Reatlors write blogs about, and that is
WHAT DO YOU OFFER FOR THAT HOUSE!
Let me start off by saying it is YOUR choice what you offer, but you want to put in a strong offer, it requires research and analysis by your Realtor. This is why you must always work with a buyers broker, this is where you believing in there abilites and trust is important.
A home is not always worth what it is listed for, but on the other hand if the listing Realtor is a reputable agent than the list price will normally be accurate to what the neighborhood and the home is worth. A low offer is not always the way to go, make sure your offer is fair!
In some towns, there are certain areas that only span a few block that the prices go up higher than other homes within the 1 mile radius that you would normally pull the comps for. When this is the situation you need your Realtor to explain exactly what it is, sometimes it is simply that the area is more desirable, other times it is school district, or distance to certain amenities a town or village can offer.
The lack of comps can sometimes cause confusion for the buyer because now you need to do quite a bit of math to add and subtract for the difference, because the comps will not match perfectly to the home they are comparing it to.
When pulling these comps your agent will try to get it as close to a match as possible but you will still need to tweak these comps accordingly. Here are some key points to remember when your agent is going over these with you.
NEW VS UPDATED
NEW appliances have never been used, this means normally you will have the paperwork for the warranties, and they have been put in within 6 months of the home being listed.
UPDATED appliances have been used by the current homeowner or tenant, these updates have been done usually within 5 - 8 years of the home being put on the market. So that updated kitchen could already be 5 years old.
Because of this even when a bank comes in, they will always add value to homes that are new/recently remodeled. Because of the changes in energy efficiency from the type of insulation that is used to compared to previous years, appliances, and building material these homes have a higher value than a home that has just been updated over the years.
For a home that is able to boast that it has been completely remodeled, with everything new can add value of anywhere from 8% - 10% compared to other homes that are simply updated. This is something very important to keep in mind when you are comparing a remodeled home to comps that are not. As a homeowner I agree that these homes are very much worth the extra money that you pay to own one, your value will rise much quicker, and your out of pocket costs to move in and maintain your home will be less than the average home-owner.
MAIN RD VS BUSY RESIDENTIAL NEIGHBORHOOD
This is normally quite the debate, I could name many roads that I would consider main roads in a town but when a bank appraiser comes in will not agree, and therefore they will make no price adjustment.
Location is the one thing you can not change about a home. You must decide as a home-buyer if this location is right for you or not.
Keep in mind that when you are putting in an offer, you can reduce your offer if you feel the home is over-priced based on the homes location, but be reasonable when you make this deduction. This is a time when trusting your Realtor and seeing the comparison is very important, ecspecially if you are not from that specific area.
Let me also say this, if a location does not work for you for any reason you should never feel pressured to still buy it from your Realtor, they should offer to show you homes in the same area away from your objection area. Some examples of this can be homes that have busier traffic patterns, sumps, or simply the privacy aspect to your neighbors.
This will be your home and you will be the one living there for the next 15 years not your Realtor.
WHAT IS THE BASEMENT REALLY WORTH ?
To me personally they are priceless, to a bank appraiser they don't add any huge value because there are many variables that decide the value for you.
Let's say someone has a fully finished basement, with no CO, well unfortunately it is worth nothing, because it is not legal.
For an average size home, with a finished basement with proper permits, the value is suprisingly low, between $5000 and $8000.
If your looking in an area that does not have basements you can not reduce the price of the home because of it lacking a basement, because all of the comps do not have them either.
This is often a surprise to those who are looking to live closer to the water, most homes will only have crawl-spaces not basements, and there is no reduction that would be considered reasonable.
THE MAN THAT WAS GIVEN A HOUSE NOT JUST A ROOM
The garage typically you will have atleast 1 in some cases 2, and in the rare occassion 3 or more.
When this happens I call it "The man that was given a house", and I unfortuntaly have to break the news to them that yes I personally appreciate their 5 car garage, painted floors, and custom shelving, but that means nothing to the bank and doesn't add anymore value than a nicely maintained 2 car garage.
A garage that is over the top is not neccessarily considered a "value" when it is is extremely large, but it is considered a selling "feature" because this isn't something that the average buyer is looking for, but some will appreciate and want.
Things like numbers of bedrooms, bathrooms, kitchens, living rooms, are what add that value to a home.
HOW MUCH ARE THOSE EXTRA ROOMS WORTH ?
When it comes to pulling comps I would personally never recommend using homes that did have the same numbers of kitchens.
Mainly because kitchens are really what sets a house apart, it can go from a 1 family to a duplex, legal 2 family, 2 family by renewalable permit, or mother daughter. Also keep in mind if you look at a home, and you notice that 2nd kitchen but it is listed strictly as a single family dwelling, and the listing broker is not representing it as a kitchen than it is because it is not a legal kitchen which makes it worth $0! This is where again it will become a selling "feature", and can quite possible cause some red flags when it comes to obtaining a mortgage.
As far as bedrooms, bathrooms, living rooms, and dens these do add value so you will increase or decrease this to the value of your comps.
Personally I will add between $8000-$10,000 depending on the depicted size of the room for average size bedrooms, and dens. If a home has a master suite which can include its own separate bath, walk-in closets, sitting rooms than obviously you would add more than $10,000.
Bathrooms although they have value, are more valued by us than a bank. Normally I try to stay as conservative as I can between $5000 - $8000.
This is also an area where the difference between NEW and UPDATED plays a huge factor, a home that has truly new kitchens and bathrooms are always worth top dollar as far as putting a number to them. Most new homes come with granite counters, tile backsplash, stainless steel appliances, furniture styled vanities, hardwood floors, CAC, multi-zoned heating these become both a feature and a value.
WHAT IS A FEATURE WORTH ?
Unfortunately I wish I could put a value on what a feature is worth, but it is practically impossible. Every feature will have its pros and cons to an individual buyer. Some features will be worth alot to a buyer, and others will be a drawback.
My best advice to home-owners is keep in line with your neighborhood when it comes to features. Do not go overboard because you can not gurantee you can re-coup the investment you made adding features, but you can be sure that your home has simliar characteristics as your competition does, so that buyers will be comparing apples to apples so to speak.
If all the homes in your neighborhood have beautiful landscaping in the front, than I would suggest small upgrades to be sure you have similiar curb appeal. If most homes have peeled back their carpeting to expose the hardwood floors beneath, when you put your home on the market either A- Remove the carpeting B- Make sure your agent expresses that their are hardwoods underneath the carpeting.
For many home-owners their features are not added initially to keep up with the neighborhood, but because they were personal wants and needs for the individual. If you choose to upgrade your home extensively more so than your neighborhood calls for, I advise you to stay as conservative as possible because it could be helpful or hurtful in a home that has been updated, and is not able to be categorized as new.
WHAT'S A FEATURE ? WHAT'S A VALUE ?
- Pools, Heated Pools, Sauna's, Hot Tubs
- 3 Car or more garage
- In Ground Sprinklers
- Brick Pavers
- Outdoor Lighting
- Solar Panels
- Elaborate Fencing, Gardens
- New Renovations & New Construction
- LEGAL Add Ons (Ex-Basement,Extentsions, Dormers)
- Waterfront/Waterview/Private Beach
- Living Space
- Property Size