I have been noticing that home prices are all over the place. Some are lower and others are higher yet the homes seem to be the same. What formula is used when pricing homes?
I myself do not have a specific formula. If the home is located in Phoenixville Borough, Schuylkill Township or East Pikeland, I can normally tell the home owner immediately what the market value of the home is once I see it. If the home has unique features which normally are not seen in other homes that needs to be taken into consideration when setting the listing price.
Comparables have been and will continue to be the best formula when pricing a home for sale. Searching the other homes that have sold that are similiar to your property will provide you with a good idea of where your home will sell once on the market. If you have been inside the comparable homes that have sold or your Realtor has this will provide a significant advantage when determining the list price for your home.
Keep in mind that a new kitchen, new bathrooms, central air, new roof, finished basement and extra garage space will add value to your home. With that said remember when appraisers are appraising your home, they don't take into consideration that your new kitchen cost you $30,000.00 while the house down the street only had a cost of $15,000.00. A new kitchen is a new kitchen. Although the $30,000.00 kitchen will help the house sell quicker and for full price with buyers, it won't affect the appraisal in the same way.
There are a few Sellers that WANT their home to be worth more than it is therefore you will see fluxation in pricing. Just because they WANT it does not mean they will receive it. There are also Realtors who will price a home too high just to have the listing. When interviewing Realtors be sure that you are seeing the comparables and if a Realtor wants to list your home for much more than what those comparables are showing you, find out the reason. Staying on the market for an extended period of time at too high of a price will provide you with a much lower price for your home in the long run.
My husband and I are very interested in a home located in Delaware County. We did submit an offer but the Seller refused it. It was lower than they were asking but we feel a fair price. We don't want to pay more than the home is worth. How can we be sure we do not?
I'm assuming that your Realtor has shown you the comparable homes in the neighborhood you want to reside and that in turn helped you with your offer price. As I have not seen the house nor do I know the circumstances it's difficult for me to comment on whether or not the house is worth the asking price.
However, whether you are buying cash or with a mortgage you should always include an Appraisal Contingency. This will ensure that you are not paying more for a home than it's current market value. If you are purchasing FHA/VA the house must appraise for your offer price therefore an Appraisal Contingency is not necessary. This is the best way to be sure you do not pay more for a home than the true market value.
Do you have Real Estate Questions? Interested in knowing how to negotiate through the Agreement of Sale? Have a question about contingencies or how to determine what the true market value of your home is at this time? Email them to Sellinghomesjenn@aol.com.
Jennifer Daywalt, Realtor
RE/MAX Results Realty- Collegeville, PA
Licensed in PA
Phoenixville's Home Town Realtor
Top Realtor 2004-2011
Author of "Ask The Realtor" - Phoenixville Patch
RE Blogger for The Phoenixville Patch
610-489-7355 Main - 610-999-7693 Direct