Dear Rebecca
We are looking at purchasing our first home and are wondering how prices are calculated and what affects value of properties. What is the best way for us to figure out what to pay?
Dave
Dear Dave
The vendor always has the final say on the asking price of a home. Generally, vendors price their home based on comparable information given to them by their listing real estate agent. A listing agent will compile a Comparative Market Analysis (CMA) from the current and historical data of homes on the market ideally within the past 6-month period. This analysis will contain similar homes that have sold; indicating market value, homes where the listing expired; sometimes indicating the price was too high and active properties; the competition. Sometimes though, a vendor may not want to recognize the market value of their home and will price their home above what the market will bear. The actual determining factors in the price of a home are location, property condition and market conditions. Location, often said to be the most important factor, considers the type of neighbourhood, closeness to amenities, and proximity to the urban center. The second factor, and perhaps most obvious is the overall property condition which takes in to account such things as age, overall state of repair, curb appeal, number of bedrooms and bathrooms, garage and features such as heat source, type of flooring and finishes. Thirdly, home prices are affected by market conditions, such as number of homes or number of buyers in the market, economic climate and mortgage rates.
As for figuring out fair pricing-Watch the market to see the asking price of homes, make note of some homes that you feel are in your range and ask your agent the selling prices of some of these homes. Visit open houses to get a sense of the market. Finding the fair value for a home or recognizing an opportunity is where your agent can really help you. By accessing recent sales information, and showing you comparable properties in person, as well as on paper, your agent is there to help you be comfortable in your purchase. Happy House Hunting
Rebecca
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