Tag: market value
Is that a question you’ve asked your real estate agent? It seems this question is being asked more and more these days. While there are many factors that go into the answer to that question, one reason that is the most frequent reason is the listing price. How is the listing price of your home so important in getting your home sold within 90 days?
Your goal is to sell your home for the best price in the shortest time. That is also the goal of your real estate agent since your agent only gets paid when your home sells. That poses a very delicate balancing act. What is the best price to get your home sold in 90 days? What relationship does that price have with what you paid for your home, or more importantly, what you owe on your mortgage? As a homeowner, these are important factors to you, but a potential buyer is not interested in what you paid for your house and what you owe on your house! To a potential buyer the only thing that is relevent is what is your house worth in this market. Isn’t that what was important to you when you bought your house?
When your home is listed, the first two weeks tell the tale of list price. If your house is shown often during that time you are probably in the right price range of comparable homes. If you haven’t received an offer, your list price could be high. If your house has only a few showings in the first two weeks that is a clear indicator that you need to take immediate pricing action to get in the range price of comparable homes in the area. If you do not act immediately another reason comes into play. What’s that?
If you’ve listed your house at a price that is above the selling price of houses that are comparable to yours and you aren’t getting showings within the first two weeks of listing your house, your house will be ‘old’ in the minds of buyers. Even worst, buyers might feel that it would be difficult to negotiate a deal on your house because the listing price is above the market. That puts you in a difficult position. By the time you lower the price to where the market was, you’ll find that the market has changed. You end up chasing the market and your house has lost its luster. Some agents may tell you that the price reduction will cause your house to show up on the MLS hot sheet notifying all local agents of the price reduction. But remember, these agents saw the first listing with a price that was above market. And there are newer listings that their clients might want to see!
Avoid the hassle! Selling your house is a business transaction and there is little room for emotion. What ever your reason for selling your house your goal is to sell it at the best price (fair market value) in the shortest time possible! While you cannot do this with price alone, one thing is sure: If you price above the market you will not sell your house in the shortest time possible.
If you have questions on this, or other real estate topics, call us.
I recently received an article that I wanted to share. Insurance in Charleston is difficult to manage unless you have the help of a great agent. Charleston insurance and coastal insurance will be a topic of conversation for some time to come. Here is some advice given to me by my State Farm insurance agent, Paula Hampton.
Understanding the value of your home
How to determine your homeowners coverage
Your home may be the biggest investment you’ll ever make. So if you are serious about protecting that investment, here is some important information to consider when determining the coverage amount for your home.
Make sure that your home is insured for at least 100% of its estimated replacement cost
To determine your amount of homeowners coverage:
- Get an estimate of the replacement cost of your home
- Select the coverage amount that best fits your needs
We recommend that you purchase an amount of coverage at least equal to the estimated replacement cost. But the choice is yours. Determining your home’s estimated replacement cost is important because this will ultimately determine which policy options are available to you. Since it is impossible to predict today what the cost will be to replace your home in the future, it’s important to have enough coverage to account for unforeseen circumstances.
Understand the difference between market value and replacement cost
Market value is the amount a buyer would pay for a home, including the land, regardless of how much it would cost to rebuild the home. Replacement cost for this purpose is the rebuilding cost necessary to repair or replace the entire home.
Replacement cost IS NOT:
- The market value of the home
- The home’s purchase price or the cost of the land
- The outstanding amount of any mortgage loan
When buying a new home, be sure to obtain a replacement cost estimate
Before you purchase a new home, make sure that you determine the appropriate amount of coverage needed. Here’s how:
- Ask if a replacement cost estimate is available when you have the home appraised
- Or, consult with your local builder association or a reputable builder for an estimate
- You can also check with your insurance agent to help you with this process
Be aware of any architectural details or unique building materials that may affect your estimated replacement cost, such as:
- Upgraded bathrooms or kitchens (including cabinets)
- Finished or partially finished basement
- Additional rooms or living space
- Custom molding or arched windows
- Other unique features
A contractor or appraiser can help estimate your home’s replacement cost
Building contractors or professional replacement cost appraisers are a good source for obtaining an estimated replacement cost for your home. Estimates from these sources should reflect your home’s features, like those mentioned above. If you are unable to obtain a detailed estimate from these sources, your insurance agent can discuss other options for estimating the replacement cost of your home.
Review your policy annually to make sure that your coverage meets your needs
Have you recently remodeled or improved your home?
When you upgrade or improve your home, you may increase your home’s estimated replacement cost. Your agent will then help you adjust your policy to meet your coverage needs. Check your policy’s provisions for notification requirements of any remodeling or additions that increase your home’s value.
Has the rate of inflation risen since your last appraisal?
Many policies provide coverage that automatically adjusts every year in an effort to compensate for increases in construction costs for your area. However, certain conditions such as severe weather can increase the demand for labor and materials, and raise costs beyond normal inflation. It is important to update your coverage amount each year to keep up with the changing economy.
What influences building costs in your area?
Market conditions in your area may impact the amount it will cost to rebuild your home if you experience a loss. Replacement cost estimates are influenced by supply of labor, demand for labor, and the cost of construction materials. Keeping up with the current market conditions in your area and changing your coverage amount accordingly, will help you maintain coverage at least equal to 100 percent of the estimated replacement cost coverage for your home.