With the average price of homes rising to somewhere between $350,000-$450,00 in northern Colorado, many potential buyers find themselves wondering if the cost is really worth it. How do you determine if your dream home is worth the expensive price tag? The first thing you need to understand is that you aren’t alone. Your real estate agent will be there every step of the way to give you all the information you need. In the end, the final decision is yours, but having all the right information can help you make the best decision possible.
Comparative Market Analysis
Even if you are new to the home-buying process, you are probably familiar with the concept of “comps” or comparables. Your real estate agent will gather information on comparable properties and prepare a Comparative Market Analysis (CMA). The CMA is an important tool, but only one piece of the puzzle. There are quite a few other factors to consider when determining the value of a home.
Location can be tricky. Is the area poised for growth or already established? What is the proximity to transit, parks, and restaurants. Buying for location involves much more than just choosing a desirable neighborhood. The house may be priced for potential growth as well as the current state of the location. It’s also good to keep in mind that neighborhoods change over the years. Some new developments can become dilapidated and dated as years pass. Does this location have staying power?
Maybe you find a home in the perfect neighborhood. It has everything you want as far as space, number of bedrooms, and layout. There is only one problem: the condition of the home is less than perfect. Perhaps it’s even bad. Property condition has a major affect on the price, but be sure to look at the whole picture. Although avocado appliances and wall-to-wall carpet may deter buyers, these things are easily remedied. A facelift is one thing, but some serious repairs can break the bank. If the roof needs replaced or there is mold damage, then these conditions could potentially lower the price significantly.
Other Factors on Fair Market Value
Several other direct factors impact market value. Ask your real estate agent if there are future developments expected near the area. Depending on the what developments are planned, this can have a positive or negative effect on the home’s value. Quality schools also drive up the price of homes. Crime rates and perceived safety are also high on the list of direct factors on market value.
Determining whether or not a home is worth the asking price is really more of an art than a science. Your real estate agent can help you find the right information, but you have to make the call. Does it feel like home? Can you see yourself raising a family there? Is it what you always imagined? Even if the numbers don’t all add up, you may decide that the home is still worth the asking price. There are some factors that just can’t be quantified.