What’s The Magic Number? (A Buyer's Perspective)

The world of real estate has a ton of questions…and most of those questions have a ton of answers! The most common question we get from our buyers is “What is this house worth?”. If you ask anyone on the street what exactly defines the value of a home, they usually reply “the market of course!”. In our decades of experience (yeah – we started when we were 2), we find that these three main questions can determine not only what the home in question is worth – but what it is worth to you. After all – if you are making the offer – this is the value that matters.

Determining The Value Of A Home

1. WHAT DO THE COMPS SAY?

The very first thing a real estate agent and potential buyer need to do is to walk in the shoes of the appraiser. The first thing an appraiser will do in determining value is to look at comparable properties in the proximity of the home with a 6 month lens. Our ‘appraiser hat’ is easy to find as we not only complete dozens of transactions a year, but provide our clients with accurate and detailed comparative market analysis reports that turn their thinking cap into an appraiser hat too!

2. WHAT DO YOU SAY?

This one tends to throw people for a loop! Most people want to pay what the home is worth…but may forget to ask themselves what it is worth to them! We call this the "Do you like it?”, “Do you love it?", or “Do you want think you can live without it?” question. The real answer of value lies somewhere between the comps and who else shows up at the table (see #3), so where you fall in that spectrum will depend on how hard you want to compete (and if you are willing to pay more than the house will appraise for).  We have had buyers who feel it is ‘worth it’ to pay whatever it takes to get the home, sometimes for medical or other situational circumstances. We always have the ‘what if’ discussion prior to making an offer to prepare our buyers for the potential of making an offer that the appraisal may not support (if applicable).

3. WHAT DO THE OTHERS SAY?

Keep your realtor close…and your buyer competition closer. While the other buyers interested in the home are by no means your enemies, they are your like-minded peers who may want the home as badly as you do! The number of offers received, and the quality of them, can be the number one determining factor in your offer getting accepted. Your incredible 20% down, non-contingent offer may have been accepted if submitted alone, but against an all cash buyer who offers 10% more…you might be hard-pressed to compete. The best thing you can do is make your very best offer (with our very best guidance!). You can control your actions – you cannot control who else shows up at the table that day.

If you have any questions about home values, the home purchase or sale process or what the market movement today means for tomorrow – you know where to find us.

Don’t forget to check back weekly for new topics, new data and new blogs released just for you!

Cheers,

Happy buying & selling,

Mark & Jason