When people usually think of real estate value they think of two forces; supply and demand. Yes, this is correct; however supply and demand only fall under the one of the four main categories that drive/depress real estate value. Supply and demand fall under the economic category of influences in real estate value. The other three include; social impact, government subjection and environmental forces.
When looking at social impact, there are a few things one would want to consider determining the effect it will have on real estate value. Most of all the value would fluctuate accordingly with population characteristics. This tie into the potential for demand in the economic section of value; the more demand, the more value a property can derive. Population however should be looked at in more depth by breaking down the sample by age and gender, rate of household formation and partition, as well as analysis of the social values such as education, law and order, and lifestyle preferences. Careful consideration of these factors will help establish trends in what would be reflected in real estate values.
Next is the government subjection, accounting for a large aspect of real estate value. This includes political and legal activities on several levels of government. These government influences have the power to overwhelm natural market forces such that you would find in the economic category. Government has their hand in providing facilities and services that affect values as well as a one of the main contributors to patterns of land use (zoning, by-laws, etc). The following are some things to look out for when assessing the government subjection of a market; fire and police services, garbage collection, transportation arrangement, utilities, zoning, building codes, health codes, and fiscal policies. Also the legislation that is set forth by the governmental factor must be accounted for, this would include; rent control laws, rights to farm, rights for managing forest, rights to agricultural land, restriction on ownership, new development laws, control of hazardous and toxic materials, and laws affecting investment power, loan terms, and mortgage lending institutions. All in all this is quite the category and its understanding will provide for a great idea of where values are currently and where they are headed.
In addition to the social impact, as well as government subjection, the environmental forces also play a part in real estate values. These can be natural or man-made and are analyzed by observing several aspects. Climatic conditions (snowfall, rainfall, temperature, humidity) would be an obvious one that would affect the values of building somewhere as well as maintenance and carrying costs, as well as the quality and type of build. Topography, soil and consideration of any toxic contaminants would also be of great importance as well as natural barriers, such as rivers, mountains, lakes, etc.
Just to get out of the 4 factors of real estate value; it is important to mention that there are some overlying factors that would be part of 2 or more of the categories. Once such factor is location, this is the link of a property in time/distance to any given origin or destination of a resident/user of the property. Location could fall under for environmental and economic, if not all categories. Due to the area and property type, properties access to public transport, schools, hospitals, stores, employment, suppliers, recreational and cultural facilities, parks, and places of worship would of importance.
This would also lead us back to the economic factor of influence on real estate value. The fundamental aspects to look for here include: employment, price levels, wage levels, industrial and commercial expansion, mortgage credit availability and cost, stock of vacant property, stock of improved property, occupancy rates, construction costs and rental/price trajectories of existing properties.
And there you have it, the 4 major pillars of real estate value; social, governmental, environmental, and economic. Taking a deep look at each of these sections one would assemble the entire spectrum of current real estate values and more importantly future real estate values.
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Pressures That Dominate Real Estate Value
Sell Your House Without an Agent: A Step-By-Step Guide
Do you really need a realtor these days? Yes and no. Yes, you can absolutely sell your house yourself, No, it's not as easy as you think, but below I will outline how to do it, should you decide to go that route.
With the emergence of sites like Zillow, Redfin, and Trulia, the real estate industry has switched from a Need-based to a Knowledge-based industry. You no longer NEED to hire an agent, in fact with many agents you could do better doing it yourself. A good realtor will know how to negotiate, will be a community expert, great marketer, and very knowledgeable with regards to all standard contracts and state forms.
If you know just enough to get yourself in trouble, you will get yourself in trouble.
Here are my steps to a successful FSBO (For Sale By Owner)
1. Determine your market value. You can obviously familiarize yourself with what is selling in your area by visiting Zillow and such, but pay $30 for a Comparative Market Analysis (CMA) from smartzip, to help properly valuate your property. A CMA will provide you with comparable sales and active listings. You need to be informed if you are negotiating with a potential buyer.
2. Pay an MLS-only type service about $300 to list your house in the MLS and offer at least 2.5% to any buyer's agent that brings you a buyer. Use pictures from an experienced real estate photographer (yes it matters) and stage your home if vacant or make presentable if you still live there (yes, that matters too).
3. List your house on Craigslist and forsalebyowner.com using postlets or vflyer to create a virtual flyer.
4. Put a sign in your yard with color flyers (you can put some black and white as back- up) and a web address linking potential buyers to your home.
5. Run a Facebook ad campaign targeted at women engaged or married between the ages of 25 and 35 in your area, and create a Google AdWords pay-per-click campaign for the keywords "[neighborhood (not city) name] homes for sale", Enter specifics better than just the city name.
I. Black Gold Properties for sale
ii. Yorba Linda High School Home
iii. Horse Property for sale
6. Enlist a good Escrow Company to help you with the transaction (this will cost you on average about 1% of the purchase price). The escrow officer is the "quarterback" of the transaction. A good one will make all the difference in the world. If your buyer is represented by an agent, they may insist on using their escrow agent. If you know your escrow agent to be a good one, don't let them talk you into using theirs. Here in Yorba Linda and Anaheim Hills, the seller typically chooses the escrow companies.
7. Price it Right! If you are not getting a lot of feedback in your first 3 weeks. This is an indication that your house is overpriced.
8. Disclose, Disclose, Disclose. The standard California Residential Purchase Agreement (RPA) used by any agent (at least a competent one) will require you to have all disclosures to the buyer with 5 days of when their offer was presented to you. Disclosures will be different based on the property being sold. Your escrow officer may be able to help you with this.
9. Ask buyer to remove their contingencies (if they have any). Contingencies are typically removed after 17 days of accepted offer, but again depends on what is written in the contract. Read and Understand the contract, before accepting any offer.
Selling your house without an agent is akin to setting up your corporation or living trust on LegalZoom, sure it can be done and save you money up front, but you never know what it will cost you down the road, or what small mistakes may hurt you.
Educate yourself and selling your house without an agent can definitely be done.
Need help or have questions?
Call or contact me:
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Realtors Vs The We Buy Houses Cash Companies
When deciding to sell your home you have two options. You can either use the services of real estate broker or you can sell it yourself to a "We Buy Houses Cash" company. Each scenario has its pros and cons which we have outlined for you below. Every situation is different and we want to make sure you make the best decision possible. We have also outlined some key questions you should ask yourself before making this big decision.
Realtors. Realtors are the best source for selling your property. It's a proven fact that realtors will get at least 10-20% more for your property than you would if you sold it yourself. It is also a proven fact that you will sell it 50% faster using the services of a local real estate agent. Since most agents are current on up to date trends they will be able to guide you in what items need to be addressed in order to get maximum price for your house. With an agent who specializes in your neighborhood they may have connections to buyers through colleagues and past clients that you do not have access to. An agents network is a very powerful tool to getting your house sold fast. I recommend using bigger cooperate brokers such as Berkshire Hathaway or Coldwell Banker Gundaker.
With any service provider their is a cost of doing business. The average expense for a realtor is 6-7% of the sales price of your home. For example if you sell your home for $200,000 it will cost you anywhere from $12,000-$14,000 at closing. If you decide to use a real estate professional to sell your property then you will more than likely be dealing with financed buyers which means you might possible have to pay seller commissions ranging anywhere from $3,000 - $5,000. Selling to a financed buyer also means once you sign a contract to purchase you will usually have to wait anywhere from 30-60 days to close. Let's also not forget the cost of inspections. Most cities require the house pass an occupancy inspection. When the city sends there inspector out there may be items that don't meet city requirement which may get costly to fix. The potential buyer will also hire a private inspector due to there own due diligence to see what the house may need. This can also get costly if the buyer has high demands before deciding to move forward with the purchase. The extra money you make hiring a real estate professional may cancel out with the expense of broker fee's and inspection expenses.
We Buy Houses Cash Companies. These companies often get a bad wrap in the area. They are often thought of as scam artists or dishonest people when in reality these companies can be of great service to people. Just like anything there are pro's and cons to taking this route. Since these ugly house buyers are investors they are not going to give you full price for you home. They are usually buying properties anywhere from 50-60 cents on the dollar.
But before you kick these guys out of your house take a moment to think about the benefits of selling to a cash investor. Fast Cash! In most cases these buyers have the cash to buy the property immediately. Not only will it be a cash sale but you don't have to worry about paying any seller concessions. Often times they will even cover your closing costs which will save you additional money. These cash buyers will also save you on those hefty realtor commissions. Since your property is a for sale by owner there will not be any broker involved. No broker = NO FEE's! Did I mention there will not be any inspections done. Since it will more than likely be an AS-IS cash sale the buyer will not bring a city or private inspector through which means you don't have to do any repairs to the property. So even though you may not get full price for what you think your home is worth you will be saving tens of thousands of dollars in fee's and repairs. It makes the deal even sweeter knowing they can close in as little as 7-10 days if needed. The best part about selling to a cash investor is that you can leave the unwanted items in the property so you can save even more money on moving expenses.
This is a big decision that should not be take lightly. There are some questions you need to ask yourself before deciding which route to take.
1. Does the home need repairs?
2. Is the home outdated to today's standards and what other similar homes look like?
3. Do I need to sell immediately?
4. Is the repair list too much for me to handle right now?
5. Will a fast sale take the burden off my shoulders of dealing with this property?
If you answered yes to any of the questions above then you will probably want to consider selling to a local real estate investor who has the cash to close right away. A fast cash offer with no realtor fee's, closing costs or hefty moving expenses may be the best fit for you. If the home has been kept up and maintained pretty good over the years and you can afford to sit on it for a while then your local real estate agent will be the best option for you and your bank account.
Click the following for more information on Berkshire Hathaway or Coldwell Banker Gundaker.
St Louis Homebuyers, LLC located in St Louis, Missouri has a great reputation in the area for being able to buy homes with cash and closing on a flexible time line. We are a member of the Better Business Bureau and maintain an A rating. Feel free to contact us from our website to receive an all cash offer in 24 hours.
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EZ Real Estate Guide
Your Guide to the REAL ESTATE MARKET