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Assessing The Value of Your Dream Home

Oi!!! I have been one busy little Realtor. And this is a blog where I should share the comings and goings and such in my business… but I can’t.

I am not one to share the intimate details of my client’s financial doings- but I can say one word that sums it up nicely. Drama. D.R.A.M.A.- and it isn’t even my clients (who are, as you might expect, perfect in every way) perpetrating all of this angst! I have some Realtors on the other side who are calm and professional (some are reading this missive. You know who you are. Thank you) and some are screaming their fool heads off- like THAT’S going to solve any problems!

Now, do I have anything positive to contribute? After all, I do try to “shed a little  light on your hum-drum little lives” (extra points for anyone who can identify that movie quote!). Yes, yes I do. I want to talk about how a buyer assess the value of a potential purchase.

The most common mistake I see, today, is the gunslinging buyer who wants to debate “price per square foot”. Seriously- why do they think this is a valid way to assess value? PPSF (price per square foot) can’t account for location, condition, aesthetics, amenities, view, seller motivation or floor plan. It is so USELESS to assess the value of a particular home that certified appraisers do not address ppsf in their appraisals. PPSF is only good for gauging TRENDS in an area or category.

For example, homes under 2500sf in La Canada were selling for around $600/sf at the peak, today it is closer to $460/sf. This tells us the trend is significantly down, and that is no surprise.

BUT, apply this PPSF to 4369 Bel Aire and you will miss a fantastic opportunity. You can get on your high horse all you want- in end you are just a loser (of that house- I am not going to make over reaching observations about your entire person- that would be rude!).

A better way to assess value is to closely study recently sold homes that are as similar as possible to the house you want to buy.  Here is the order of factors to consider:

  1. Location- how close is it?
  2. Time how long ago was the sale?
  3. Size
  4. Room count, especially bathrooms
  5. Lot size/usability
  6. Amenities/condition/age

There are certain conditions that can really wack the price of a particular home.  Spectacular view, new construction and outstanding presentation can make the price really high and seller distress, super busy location or incredibly bad presentation can make it really low.  This will make my engineers crazy, but assessing a home’s value is fuzzy logic, at best.  In the end, the only opinion that matters is yours- but beware that your method doesn’t make you homeless!

About Kendyl Young

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