Nowadays, there are three basic values for any home on the market: *What the seller feels it's worth *What the buyer feels it's worth *What the Professional Appraiser feels it's worth The most important key to any successful home purchase is to get all three of those numbers to perfectly align with one another. Here are some other ways to determine what any home is really worth. Comps This term is commonly used in the world of real estate and is short for comparable home sale nearby. While looking for homes for sale, you will be able to see all of the various price ranges in that same area of homes that recently sold. Additionally, your agent will also be able to help you compare homes of similar sizes and amenities that sold within the past six months, which is something that basic sale orders won't ever tell you about. In a hot market, this is something that will often be relatively easy, and there will often be a lot of comps to choose from. Market activity is also something else that needs to be taken into consideration as well. For instance, take a look at the overall location of a home and find a nearby area with homes that have the exact same vintage and are similar to the neighborhood in which you are currently searching. In terms of location, think about the school districts as well and how well-regarded they are. Amenities and age are two other factors to take into account, as you should include comps that have amenities such as a pool, guest house, etc., as well as consider the fact that homes built at the same time will typically have the same amenities. You and/or your real estate agent can contact any other agents involved with the home to obtain information regarding comps that seem a little too off the mark. What Does the Appraiser Have to Do with It? The simple answer to this question is that they have quite a lot to do with it. For instance, if you fall in love with a home and are willing to pay a premium in order to get it, you could still find yourself experiencing a major issue. Your mortgage lender will likely be willing to pay a professional appraiser to study all of the comps and evaluate the entire home in order to come up with an approximate value. If the actual value comes in blow the price that was agreed to, then there will be a problem, as you will then likely need to come up with more cash upfront or renegotiate the price altogether. What is the Home Worth to Someone Else? Even if you plan to stay in your new home forever, there are many circumstances that can still change. At some point, you may still need or want to sell it, which means you will have to consider the resale value. You should look out for factors that include the total square footage not matching what's listed in the tax records, which is a sign that an addition was completed without the proper building permits being issued. What is the Home Worth to You? There are some things that are simply a matter of choice. For instance, if a home has a swimming pool that's factored into the total price, yet you plan to just fill it in and re-landscape the area, then it may not make sense to you to pay any extra money. If you're someone who loves new carpeting, then chances are you may not have an issue with paying a little more money for a house that has this wall-to-wall. On the other hand, if you're just going to tear it out and use hardwood flooring, then the extra money isn't worth it. You also may not want to pay extra for a huge gourmet kitchen if a more reasonably-sized one would suit you better. If you have any further questions on this topic please don't hesitate to contact us. We would be more than happy to help.