When it comes to Real Estate, true value is something that's hard to determine. What most people are interested in is "market value." That's the value that helps us turn Real Estate into cash so to speak.Unlike replacement value, market value can be influenced by location, scarcity or other emenities that make it more appealing to a potential buyer. Sometimes properties get over-developed and there just isn't a buyer willing to pay the asking price no mater how much money has been spent to make the property better than it was.
Value is in the eye of the beholder. Some buyers purchase a property to serve as a life long residence, while others hope to make a profit later when they sell the property to move on to another house. There are even those investers who buy a home just to improve it and resell for a profit. If enough people do this there can be too many homes on the market in a given price range.
One hard thing to accept sometimes is what our home is really worth in terms of demand in the market place. Think about it. If you have one hundred thousand to spend wouldn't you look and see just how much you could get for your money? Most buyers feel the same way, so sellers need to keep this competitive factor in mind when they set prices for properties they wish to sell.
To Flip or not to Flip
are you sure you are ready to flip and not flop
If TV programs have done one thing in the past few years it's been to get the hopes up of many Americans who want to make a fast buck in the Real Estate industry. For most of them it won't be fast. The idea is to "flip" a property by renovating or remodeling it and then turn around and re-sell it fast so as not to pay too much interest as part of the handling costs of owning the home during the flip period. Flipping of course is not as easy as just making a purchase that is priced below market value but rather it requires consideration of the neighborhood. If properties in one area are already 15 to 20% higher, then every dollar invested in them also will be worth that much more. If you are investing 100 thousand in one end of a city and 120 in a higher value end for the same amenities in a house, then you can expect to get a better return on your remodel dollars on the higher priced home that is located in a higher value market. Wise decisions are still important and in a small market area many people will remember what you paid for a home and unless it is apparent that you did the best job possible they may question your new higher price. After you have improved your Property to your satisfaction you have to market the project and pricing it right can make the difference. (DOM) Days on the Market cost you money in principle and in interest and in the end can cut into the profit you hope to gain by flipping the house. Few people are so lucky as to just be in the right place at the right time and get a property distressed to the point that you can get it for next to nothing. Always there is a story about someone who bought a home and sold it the same day for a profit. Those are great occassions for the investor but do not count on that happening for you in todays market. "Less is more" in many things and when it comes to renovations it's better to keep things simple and do them right than to go overboard with bells and whistles that might tend to make your project seem over developed. If you can't get it right, then skip that aspect of your design improvement. Set a budget for renovations and attempt to stick with it. Work from a list of priorities so that you do not over develop some areas while neglecting other areas of the home. Everyone wins when a house is improved in a neighborhood.
