Regarding Value

By
Real Estate Agent with Coldwell Banker Select Professionals

 Let's have a little chat about value can we? Although this discussion can apply to most anything that is bought or sold, let's limit our discussion to the buying the selling of residential real estate.

In real estate, we throw around all kinds of numbers about the value of a particular piece of property. There's the appraised value, the market value, the assessed value, fair market value, after repair value and so on. So just what is the value of the home that your wanting to buy?

Simply stated, the value on a home is what is somebody else is willing to pay for it. Buyers like to think they got a great bargain and sellers want top dollar for their home. In the middle is the realtor whose working really hard to make both buyer and seller happy.

The trick is to determine just what price another reasonable person would pay for a particular property with all else being equal. The problem comes in when you stop and realize that every purchase is based on emotion. That's right. Every purchase. I don't care if we're talking about buying a house, a car, a tank of gas or toilet paper.

What? You don't get emotional about buying a tank of gas or toilet paper? While you may not tear up or get excited while filling up the tank or standing in line at the grocery, one of the most basic yet strongest emotions we have is in play and that is FEAR. It's the fear of running out.

We humans tend to move from pain to pleasure. We want to avoid to fear, panic and general distress of running out of gas or TP. Don't believe me? Leave the Charmin of your grocery list for a few weeks and see what happens.

When it comes to real estate, it's no different. It all boils down to how badly do you want to own the house. We could take two identical houses and put them in different sections of town, and their value to you, the buyer, would be very different. One is in a great school district, close to your favorite grocery store and has easy access to your favorite route to work. The other is in a neighborhood with a high crime rate, the school district is horrible and cars are often seen on blocks rather than with all four tires. I think you'd agree that you'd pay more for one than the other.

By the same token, we could put two different houses right next to each other and again they'd have very different neighborhoods. Let's say they both have 3 bedrooms 2 and half baths and the same square footage. On paper, their comparable. One is ranch while the other is a two story. Depending on your preferences and live style, one house will be just right for you and the other just won't work for you at all.

So what's the point of this little diatribe? When looking at any given house and making your decision, the only question you should be asking yourself is "Am I willing to pay this amount of money for the privilege of owning this home?" Until you can answer that question in the affirmative, nothing else matters.

Comments (1)

Brian Schulman
Coldwell Banker Residential Brokerage, Lancaster PA - Lancaster, PA
Lancaster County PA RealEstate Expert 717-951-5552

Some items have "elastic" demand, and some don't.  People need food whether or not times are good.  On the other hand, fear or greed are motivators as to whether to buy or sell real estate or stocks.

Jan 01, 2011 01:48 AM