The best resource for information on neighboring home sales is your real estate agent. He or she can provide a comparative market analysis to give you a better idea of how much homes are selling for in your area.
Neighborhood home sale price are what appraisers and lenders use to determine your home’s value. Appraisers take into account:
- Square footage
- Number of bedrooms
- Number of bathrooms
- The general condition of the property
- Location (corner lots, waterfront, etc.)
- Age of the home
- Upgrades that may add value
In other words, just because the home across from you with two extra bedrooms and ocean views sold for $2 million doesn’t mean yours will. Unfortunately, at the same time, if your next-door neighbor, whose home is virtually identical to yours, was foreclosed on and sold for a third of what you paid for yours, the reduction in value will affect your home’s value as well.
There is a big difference between asking prices and sold prices. The asking price is the amount of money the seller is hoping to realize when the house sells. The selling price is what a willing buyer paid for the home. The latter is known as market value. Therefore, only the prices of homes sold in your neighborhood will be used by an appraiser to determine the value of your home. By watching sales price trends, you will get a better idea of which way your local market is trending.
Before you start adding real estate investors to the bodies in your backyard, recognize that they are now an essential part of boosting your home’s value. Yes, they may have helped to pump up prices of homes in the past, but the odds are these aren’t the same guys and gals. Remember, those investors probably made you more money than you could have ever hoped for from your day job, and no one forced you to buy at the peak of the market. Plus, these new investors are critical for rebuilding the economy.
They aren’t setting foreclosure prices and each one they buy and rehab and resell for a higher amount is creating jobs, generating taxes to improve your kid’s schools and increasing your home’s value. Finally, if you are ready to put some work into improving your home’s value, these investors can be a great resource in determining the best improvement projects to increase property value.