For those of you who do not think that your neighbors truly affect your lifestyle, take a look at your neighborhood home values when you have a chance. You will quickly find that no single property can rise above its peers in the market, especially when those peers are standing right next door. Here we will take a look at just how much your neighbor’s home affects your home value, especially when there are sales going on in your neighborhood.
Will my neighbors automatically be used as comps for my property?
For those of you who do not know what a comp is, it is a shortened version of the competition. If a house is a comp to yours, that means it can be used by professional real estate agents in order to help gauge the property value of your home. In most cases, comps will have layouts, sizes, and amenities in the home that are similar to your home, but this is not always the case. Your neighbor’s home does not always have to be a comp, but rest assured that real estate agents, sellers, and lenders will always look to your neighbor’s home first before looking elsewhere.
Just as soon as a few properties around your neighborhood begin selling in the same price range, the Multiple Listings Service (MLS) will reflect these changes. In turn, the public listings on generally accessible real estate sites like Movoto will change, as well. Once the general public gets a sense of the price range in your neighborhood as a consistent thing, people will begin to look at outliers as dysfunctional, assuming that the properties around yours are comps. If your property is priced well below your neighbors, potential buyers will think there is something seriously wrong. If your property is priced ahead of your neighbors, people may think that you are trying to overprice your property. You may get a few people interested in the amenities that you offer if you drastically overprice your home, but if they do not justify the price difference, then your property will be quickly dismissed.
Just how much did that sale across the street last week affect my house value?
If you ask seven different appraisal professionals this question, you will get seven different answers. The appraisal that you should listen to comes from the person with a positive reputation in the business. If no one listens to the person that you have to do your appraisal, then that overpricing that you receive will not carry much weight in the marketplace.
In short, every sale that is close to you affects your home value. Items such as foreclosures affect it in a negative way and a celebrity moving into the area affects it in a positive way. The secret is figuring out how much these events affect your property.
Most people, especially those who are preparing for a sale, will take an average value of many appraisals that are given by reputable sources. Each of these professionals will take different things into account, but a median value seems the most justifiable solution if you have to defend yourself to a buyer’s lender or to a buyer.
You can and should take your own assessment and include your emotional tie to the home. After all, if you are preparing to sell the property, the emotional attachment that you have is part of the utility that you gain from the house and the economic cost that you take on from the sale.
How do property assessments affect my home value?
If a big sale in your neighborhood affects the property assessment value of your home, then you have a legitimate claim to move your home price in the direction of that change. Because the municipality is supposed to be completely disassociated from the profit incentive of the market, its assessments are taken more seriously by real estate professionals. Keep the latest assessments in your records if they are advantageous for your home value. If they are not, then you may appeal them upon the sale of your home.
What is the bottom line?
The bottom line is that your home value is based on perception. The more that you bring people into the frame of your perspective, the greater your advantage in real estate negotiations. No matter the metrics that you use to justify your home value, make sure that you have a justification. Being able to back up your position will always win the day with any lender or buyer. Having cash reserves readily available so that you never appear desperate to sell is a great tool that helps to uphold your perspective. Finally, make sure that your home is always in tip-top shape. Whether or not you have the biggest house on the block, you help to justify your pricing by making your home look the best that it can be at all times.
2 Point Highlight
You may get a few people interested in the amenities that you offer if you drastically overprice your home, but if they do not justify the price difference, then your property will be quickly dismissed.
After all, if you are preparing to sell the property, the emotional attachment that you have is part of the utility that you gain from the house and the economic cost that you take on from the sale.
