What Contributes to a Home’s Value?

I had an interesting conversation today with a potential seller.  Her statement was, “I won’t price the home at x, I have to cover closing costs and commissions.”

The question I think this brings up is, “what is included in a home’s value?”

Firstly, value includes all sorts of solid features like lot and house size, location, condition and amenities.  But it also includes fuzzy things like how much emotional attraction/attachment there is and the buyer or seller’s timing and motivation.  Lastly there is the very intangible concept of what the buyer’s alternative is to buying and the seller’s alternative to selling.

All of these items play into the home’s eventual selling price.  Closing costs do not.

Closing costs are never part of the home’s value.  In fact, the cost of selling and buying a home is a completely separate issue from the home value.  Closing cost may determine your motivation for selling or buying and they may change your business decisions on whether or not to sell or buy, but they have no impact on the market value.

Failure to separate these issues will result in a bad business decision every time – and  you can afford to make mistakes in this market!

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