We constantly monitor real estate trends in Middle Tennessee to determine a home’s worth!
Many times, home buyers believe foreclosed properties will sell for much less than comparable homes in the same area….say 5-40% less. The value depends on several factors:
- The biggest factor is recent sales of “like-kind” homes in the neighborhood. Real comparables are not 5 miles away from the subject property, rather between a half mile to a mile away at furthest. The only time a property should be considered as a comparable that is further away would be if no “like-kind” homes are closer. “Like-kind” properties share common features like area shopping, lakes (if lake front), bus routes, etc. This would also be done if the home you are valuing is much older or newer than homes surrounding it. You want sales that are generally no older than 6 months for the best idea of a home’s value.
Not only are closed sales in the last 6 months important, but we also look at active and pending properties to see the direction homes are going in the area.
- There are other features that are important in determining a home’s value. Is the home within the same square foot parameters of historical sales, is the home made of brick, wood or stucco, how many fireplaces, is the home close to a busy road, does it have storage buildings, has there been any recent remodeling, how old the home is and how many garage spaces are just a few things to consider when determining value.
- If a home has been for sale for a long time, there is a higher probability that it will sell for less than homes that are comparable.
- Another huge determining factor of a home’s value is the supply and demand for homes selling in the area. If there is a short supply, but a big demand for area homes, the less likely there is going to be a huge reduction in discounts on a foreclosure. Likewise, if there is low demand in the area you are looking, you can expect a bigger discount on distressed properties. We keep an eye on all these factors to help you make that determination.
- Is the home in great condition? Properties in great shape normally sell for more. If it has been a long time since a home was remodeled, or if there is a lot of repairs to do, or if a home has not had maintenance kept up on it, you can expect the home to sell for less. In making an offer on a home, the savvy buyer needs to know a good ball park estimate of what it will take to bring the home up to par with comparable area properties.
When helping our client make offers on homes, be it foreclosures or just great buys, we consider all these factors when running a Comparable Market Analysis. We would love nothing more than to help you find a great property with value when making a purchase decision!
If you have questions, or you want to start the journey of purchasing a HUD or VA home, call us at 615-474-2808, or fill out the form below!