Besides using cost-per-sf, how else can we determine the approximate value of a home?
The appraisers have a book of formulas and guidelines, but did you know that they are given the sales price before they go out to appraise? They use their book’s guidelines to show that the sales price is close enough to the approximate value – it is an inexact science.
It’s important to be able to identify the things that affect a home’s value, and secondly, be able to put an approximate dollar amount on them. This video gives some examples, and assigns values in 5% and 10% increments – I don’t think it has to be any more complicated than that, because real estate appraisal/valuation is……an approximation:
For you buyers out there, listen to Jim’s advice! I wish I had seen this video about 3 weeks ago. While in negotiations (out-of-state), I was considering a difference of $5,000. Another buyer came in and offered full price. What’s $5-$10,000 when it’s the house you really want. I’m still in mourning…
Jim,
Good stuff. And yes, those GPS devices “can” dry you nuts.
“dry” should read “drive”. Damn GPS.
Jim, could you discuss dealing with “as is” fixers being sold by estates? Is there any hope for wiggle room on price if inspections in escrow reveal much bigger problems than were anticipated?
I think it is important to note that those negatives get amplified in a buyer’s market since the house might not even get an offer at all.
Is there any hope for wiggle room on price if inspections in escrow reveal much bigger problems than were anticipated?
The sellers of “as-is fixers” are among the biggest benefactors of realtor ignorance and inexperience.
You’ve probably noticed that there isn’t much price difference between the dogs and the plums, and agents will push their clients to buy a fixer just because they can get 5% or 10% off.
Of course, agents who started in the last ten years think a 5% discount is a big win, because they are accustomed to having to pay over list price.
How to get adequately compensated after the inspection? Never easy with low-motivated sellers, which is typical for estate sales, the houses are usually paid off, and the heirs are just looking for max money to split.
Submitting 2-3 detailed quotes will back up your request, but the sellers have to like you, and feel like helping you out, for them to give you a break.
Buyers want to get demanding, thinking they are owed something. It happens all the time that buyers will tell me, “Jim you make them do this, you tell them to do that, etc.”
Sellers don’t even have to respond to your request, let alone do anything about it. Sweet-talking you way into their hearts is the best way to go, and it starts with the listing agent.
You have a much better shot if the listing agent is a female, typically they are more compassionate. Guys don’t give a hoot; this is business, and you made a deal.
Jim, you left out your 2 favorite negatives, ice cream trucks and airplanes.
Stand-by, this is Part 1 😉
Jim,
What about houses on corners, i.e., streets in front and one side? What about front, back & side? You covered a house that had the latter but the backside was a very busy multi-laner; how much of a difference for busy vs. light traffic?
Great video, Jim. I had a lot of these subjective qualities in mind while shopping for my home. We also didn’t quibble over $5k in selling price. It was listed at 560, we offered 525, and they countered (to our surprise) with only 530. SOLD!
Speaking of subjective evaluation, if anyone wants to give me feedback on my HomeVal product, I’d love to incorporate your ideas. I’ll give a link back to whomever wants one in exchange. 🙂
http://homeval.kwaping.com/
I did make a small change to the HOA section recently, so anyone who’s gone there in the past may want to look again.
TJ – here’s my take on your questions. Corner lots are usually larger (true or myth?) so that would make them more desirable. I think it would depend greatly on the traffic on those streets, though.
I also think kids are a big factor with how important traffic is. Sure, more traffic might make it harder to get in and out of your driveway, but with a five-year-old it’s a big safety issue. I bought on a quiet cul-de-sac and now would not consider anything else (except a place in the country). Being able to have my kid play with the neighborhood kids out in the street and not worrying about people driving past is a HUGE bonus for me.
Without kids, low or no traffic is a “nice, but not required” item. With kids, I’d call it a must-have.
Regarding safety in cul-de-sac:
http://www.npr.org/templates/story/story.php?storyId=5455743
Safety Hype
Lucy says safety has always been a big selling point for cul-de-sacs. From the beginning, builders noted that they gave fire trucks extra room to turn around, and that they prevented strange cars from speeding by on their way to somewhere else. Ads for cul-de-sacs often pictured children riding bikes and tricycles in the street.
These days, those images seem grimly ironic to people who actually look at safety statistics. For example, Lucy says cul-de-sac communities turn out to have some of the highest rates of traffic accidents involving young children.
“The actual research about injuries and deaths to small children under five is that the main cause of death is being backed over, not being driven over forward,” he says. “And it would be expected that the main people doing the backing over would in fact be family members, usually the parents.”
Armed with such arguments, critics of the cul-de-sac have won some victories in recent years. In cities such as Charlotte, N.C., Portland, Ore., and Austin, Texas, construction of cul-de-sac-based suburbs has basically been banned. In other places, cul-de-sac communities have been retrofitted with cross streets.
I drive past those power lines every day. I don’t think you even get much of an ocean view on that street unless you’re in the house on the corner with Ocean Air Drive, which is a fairly busy street.
I wonder if the the ocean view is enough to cancel out the power lines and the street noise.
I was looking at homes on cul-de-sacs since the pie-shaped lot tends to make the side and rear yards huge, but recently I noticed in newer communities in La Mesa and in Granite Hills (unincorporated) the entire circle of the cul-de-sac is marked as a fire lane, so even if there is any curb space, your guests can’t park in front of your house. We are not party animals by any means, but I find this to be a detriment being right on the circle.
Mark,
Agreed, the ocean view is minimal and may only been seen from the second story, if at all. No extra value for looking through power lines and/or over a busy street.
GW,
Thanks I’ll pick up a clip of red curbs for Part 2, a minor irritant but with small driveways too, your guests could end up a block or two away!
All very good points, Jim. Thanks!
Looking:
Thanks for that info. I’m surprised to hear the results of that study, and can’t help but think it’s flawed. For example, “cul-de-sac communities turn out to have some of the highest rates of traffic accidents involving young children.” Maybe that’s because that’s where all the parents of young children live? It’s like those reports of the most-stolen vehicles that don’t take sales into account, or dog-bite reports by breed which don’t account for breed popularity.
I maintain that living in a cul-de-sac is inherently safer than a busy thoroughfare. The risk of backing over a child is there in both cases, but at least the cul-de-sac doesn’t have people speeding through it.
Also, as people trade in their old cars for newer ones, advanced technology (sensors, cameras) will continue to decrease the chances of accidentally backing over a child or pet.
I shake my head at those communities who banned cul-de-sacs or retrofitted them with cross streets. That seems like ridiculous political knee-jerking to me.
Would a 5 or 10 grand repair request work on an REO?
I personally think railroad tracks, especially if there are night time freight trains (as opposed to just daytime passenger trains) is a huge negative. I think the power lines are less of a negative than Jim does.
Here’s my take on corner lots vs. culdesac vs. others:
Corner lots have these pluses:
1. Much more street parking for guests.
2. Usually larger lots.
3. More flexibility for additions (assuming the lot is large enough (so this is mainly for older houses), one might be able to add RV parking or another garage (maybe turning the original into a room) on the second street).
4. Easier to find for guests (it’s the green house on the corner of blah and blah).
Corner lots have these negatives:
1. Double the traffic possibilities. If one or both of the streets is busy, there’s a potential for lots of road noise.
2. Less private-folks on the street probably can see into your backyard (or climb the fence to it to do so). You might also have bedroom windows that will face the street on a corner lot that would merely face another house on a normal one.
Culdesac pluses:
1. More private.
2. Less traffic noise (unless you back to a freeway or other major road-not uncommon at the end of a culdesac).
3. Usually larger lots again.
4. Somewhat safe for kids to play in (but see looking’s comments).
5. You can block off the street for a block party (could be a negative if you are especially private).
Culdesac negatives:
1. Parking.
2. Parking.
3. Parking!!!
Especially in newer communities with tiny lots, you get little to no street parking. Big problem if you ever have any guests over at all, or own a bunch of cars yourself.
Biggest negative for “regular” lots not on the corner or the end of a culdesac is that your lot is probably smaller than those on either.