When it comes to putting your home on the market or bidding on one that's already there, many factors play a role in the decision of value. In short, the value of any home is what the buyer is willing to pay for it. Yet, figuring out what that number is can be difficult. That is why you will likely have an agent run a competitive analysis on the home, especially if you are listing your home or buying in a competitive market place. In short, it provides you with a better understanding of the home's value.
How Is It Calculated?
The value of a home is ultimately decided by an appraiser. An appraisal is different from a competitive analysis, but the process is partly the same. In short, this process takes a close look at the value of homes that have recently sold in the area and compares your home to them to determine a value. It considers many factors, including:
- The size of the homes, in particular the number of rooms and the number of bedrooms and baths
- The square footage of the home
- The style of home
- The age of the home
- Features of the home
- The lot size of the property
- Anything that makes it stand out
By looking at the value of homes in the area that have recently sold, it is possible to formulate what a home is likely to sell for on the market today. It is important to note that these are very subjective numbers, and you may not agree with them. However, the process a real estate agent uses to come up with these numbers is based on numerous factors, not just your opinion of your home's value.
But That's Not What I Paid
One of the key concerns that many home sellers have is the appreciation of their home's value. Many believe that their home is worth more than it was when they purchased it. That may be the case, or it may not be. Again, this is depending on what the market's current conditions say.
When you come in to talk to a real estate agent, you'll learn what the home is worth based on a competitive analysis. Then, you and the agent can determine what the starting point is for the home's listing price or the amount you plan to bid on it for.
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