How to Evaluate a Home's Listing Price
As a home buyer looking for a new home it can be overwhelming to compare homes on the market. Typically homes will have pros and cons and you’ll have to be flexible, because it’s uncommon to get everything checked off your wish list. However, understanding how to compare potential homes and evaluate a home’s listing price will help you make a more informed decision.
Here are 5 ways to evaluate a home’s listing price:
1. View surrounding home listings
The first way to evaluate a home’s listing price is to look at surrounding homes that are up for sale. Finding a comparable home, with similar characteristics will help you evaluate where the listing falls within the neighborhood. There are many other factors that go into creating a home listing, so although you shouldn’t base your decision on this one metric, it’s a good starting point.
2. Calculate the home’s price per square foot
Once you’ve viewed the home’s initial listing price, you can calculate it out by price per square foot. This metric gives you a dollar amount to compare to other homes that you’re interested in or that are in the area. Price per square foot gives you a way to evaluate how much space you’re getting for your money.
3. Evaluate the bedroom and bath count
Another key area to look at to evaluate a home’s listing price is the number of bedrooms and baths it has. This is probably one of the areas that’s most top of mind when looking at home listings because you need a certain amount of bedrooms and baths to fit your family. Looking at the bedroom and bath count in a home will help you compare it to other homes you’re interested in within the same price range. For example if you are comparing two homes that are the same price, and the same price per square foot, however one has 2 full baths instead of 1 and a half baths, that might be your deciding factor.
4. Evaluate the home’s condition & potential updates
The next area you can look at to evaluate a home’s listing price is the condition of the inside of the home. By either looking at pictures or doing a walk through you will be able to see where updates are necessary. Less involved cosmetic updates are typically not a huge deal to home buyers. However, if you walk through a home and see two to three major updates, like a kitchen remodel that needs to be done for example, you need to consider that. When evaluating a home’s listing price and comparing it to other listings this is a factor that makes a huge difference. Purchasing a home for a significantly lower amount that needs a ton of updates may also push you past your budget.
5. Evaluate the lot and surrounding area
A final area to look at when evaluating a home’s listing price is the lot size and surrounding area. For some home buyers the land that the home is on is much more important than how many updates are needed in the home. For others it’s all about location and they don’t necessarily care about the size of the lot. Depending on your wish list this area of evaluation may look different to you than it does another buyer. When evaluating a home’s listing price you should take your lot and surrounding area preference into account into the home’s price.
Using these 5 areas, you can evaluate a home’s listing price and more easily compare it to other homes you’re interested in. Many times home buyers, especially first time home buyers, get caught up in finding the best deal and fail to look at all of the elements of a home that make up a listing. By thoroughly comparing homes you will have a better understanding of what areas are most important to you and what a good fit looks like for you and your family. Using your real estate agent as a resource you can better evaluate a home’s listing price to make your home buying decision more easily.
