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Can You Guess What The Houses Next Door are Worth?
Owning rental Houses: The Do’s and the Don’ts
Selling Houses in Sedona: Sorting Out The Price Tag
How Does Landscaping Affect The Value Of Houses in Sedona?
Can You Guess What The Houses Next Door are Worth?
September 13, 2014
Do you really know what the house you are about to purchase is worth? Chances are you may not even know what the house you’ve been living in for the past ten years is worth or the worth of that beautiful house you admire two blocks down. Understanding property value can not only save you from being ripped-off, it can also help you price your home accurately.
What if we asked you to guess the value of the properties on your block, how accurate would you be? Most buyers and sellers today are operating under the perception that they have a great understanding of property value in their area. In fact, a surprising 64.8% believe that they can give a slightly accurate estimation of the price for houses in the state while the remaining 16.3% believe they can come up with a spot on estimation.
Understanding the Market and Making Accurate Estimations
If you’re not sure what the house you are about to sell or buy is worth, below are a few guidelines that can help you to get a better understanding of property value.
The Location of the Property
Location plays a significant role in determining the value of a property. While you can always renovate a building, resize it and reinvent its aesthetic features, you will never be able to change the location. Examine the area carefully, taking into consideration the level of crime and natural hazards in the area as well as the condition of infrastructure and the availability of essential services.
The Size of the Property
The bigger the land and building size the higher the value of the property. Consider the occupancy capacity of the home. What are the sizes of the living room, bedrooms and bathrooms in the building? How much space is not a part of the domicile? Be sure to address these questions before you determine the value of the property.
Age and Condition of the Building
We all get weaker as we age and require more care, likewise so does real estate. A newly built building will attract higher values and a higher volume of premium prospective buyers than a building that was constructed 10 or 15 years ago. Older buildings are usually in poorer condition and will require frequent maintenance, but if the building has been recently renovated it can be sold at a higher price. Historical homes that were built prior to World War II can also attract a high price.
Eliminate the Guessing: Use Facts
Many areas in Arizona that were previously overlooked are becoming premier real estate locations. With the level of opportunities the market offers for upsizing, downsizing and investing, more and more people are gravitating towards the state.
When it comes to property value, eliminate the guess work. Look at the facts and keep a close watch on the prices of other properties in the area and the real estate demand for the location. If you decide to sell your home you will have a leg up on the competition.
If you are contemplating buying rental houses in Sedona, AZ- there are some “do’s” and “don’ts” you need to be aware of in order to help you yield good results.
This will protect your investment and give you peace of mind. In fact, most experts will suggest that you require that your tenants have renter’s insurance as well. This is because your insurance will not include the tenant’s possessions, which could become a problem for you if the worst happens. To protect yourself against paying for damage done by the renter, insist on an adequate security deposit and ensure that you have documented proof of the property’s condition when the tenant moves in. This should contain photos and be signed by the renter.
The Cost Of Rent Needs To Reflect The Local Market
Research the average rent paid in the area for similar properties. The rent you charge should be in this range to make your property competitive and should cover your mortgage payment, taxes, maintenance and repairs, and other expenses with a little left over as profit. Your budget for maintenance and repairs should take into account all labor and material costs.
Location is Key
The desirability of the neighborhood will determine both the tenant you attract and how often your property sits vacant. Research factors such as crime, employment opportunities; and proximity to schools as these will all impact your rental property.
Screening Tenants Is Not to Be Taken Lightly
Ask for references from the two most recent landlords. Double check all documents, such as credit reports to photo identification. There are many businesses that provide services to check credit and background information. You will need (signed) permission from the renter.
Keep on Top of Your Finances
Establish a separate bank account for the property. If you have several properties, each should have its own account. This way you can easily analyze the finances of each investment separately. Also, keep your tax records straight. Remember that property taxes are not standard and there may be variations depending on the area each property is in.
Maintaining Your Property
If you purchase an older property watch out for problems like lead paint, asbestos and mold. These may prove costly to correct and you may be sued by an affected tenant. For general repairs, you may consider doing the work yourself. You may want to hire a property manager to handle the day-to-day concerns. Property managers typically charge a percentage of the rent. Usually this proves to be money well spent.
When compared to real estate, no other industry caters to such a diversified audience of personalities and preferences. Every house has its own character and function. Every person has different values and requirements. This is why selecting a property prices can be so challenging. In all fairness, trying to determine the exact price of a property without expert assistance is not an easy task. In fact, asking price within the industry is based on the duality actual value and desired value. A vast majority of home buyers do not comprehend that the act of setting an asking price is typically an invitation to negotiate.
Balance is Essential When Pricing a Home
Investors will undoubtedly factor in the time and sweat spent to transform the property when asked to name an asking price. And this is completely understandable. Wouldn’t you agree?
On the flip side there are hordes of sellers who now believe that the best way to approach is to set the asking price below the market in the hope that they will be able to sell at the highest possible price and the fastest pace. Theoretically, this is a sound method. By pricing low you are increasing the chances of inspiring a bidding war. And with some luck and skill on your side the competition could end with the final price above market value. No matter the asking price of your home; You should be prepared to see a 10% gap between the sales price and your asking price.
How Is All of This Affected By Comparables?
Comparables (“Comps”) refers to other similar (comparable) real estate. Last year the average Arizona home was selling for 5%-10% less than original asking prices. This is is a sizeable difference. Using comps, it is much easier to choose a realistic asking price, as well as settle on a sales price. The actual starting point that so many sellers in today’s market use to set their prices are the comparables.
Speaking plainly, choosing an asking price and an expected sales price is not an exact science. It is an estimation, based off of similar properties in similar areas with similar features and what has happened with them, recently. Far too many variables exist, interacting with a variety of influential factors. However, by using comps and getting expert opinions you can mitigate your risks and time on the market and maximize your return on investment.
Whenever someone decides to pursue the sale of their house, one of the first things they do is assess the property. This is done to get a feel of what the selling price could be. Subsequently, they analyze repairs, improvements and additions that can increase the value of the house and its attractiveness. This enables them to fish for a higher selling price and less time on the market.
It is up to the homeowner to decide if they want to repaint the study or swap out and update the kitchen fixtures. Acquiring the services of a professional cleaning service or simply clearing out the dust that has been piling up in that spare room can help you to make a good first impression to a prospective buyer.
There is, however, one aspect of the home that often times is missed- and that is landscaping.
Landscaping Can Pay
Every real estate consultant will tell you the same thing “An expertly landscaped property can encourage a speedy sale”. This is true because you are giving the home curb appeal and increasing its worth. It is up to you to decide just how the property speaks to prospective buyers when they first see it.
By landscaping, you can add up to 20 percent to the value of the home. That 20 percent is more than the increase in value that you would get from focusing your efforts on the bathrooms, the kitchen or the flooring.
A report from The Appraisal Institute highlighted the intrinsic value in landscaping. They shared that it may not only increase the price but it can also significantly reduce the time a property is on the market.
Trees Are Good but More Can Be Done
Just how can you make substantial improvements that will have a significant impact on the value of the home? A good first step is ask 1-2 professional landscapers to give you a bid on suggested changes. Use this chance to ask questions and get advice. Be upfront with them that you might get a bid somewhere else and you are not sure if you will hire them for the job. Then have a realtor walk the property with you and discuss the suggestions and cost. The realtor should be able to direct you to eliminate some costly changes and encourage others. This will leverage your dollar to get the best outcome.