TOO MANY PEOPLE DENY THEMSELVES THE OPPORTUNITY TO BUY THEIR DREAM HOME OR PROPERTY.
When buying Real Estate a lot of people get blinded by the numbers. Many times I have seen people buy less expensive parcels simply because it was cheaper. Price was the only criteria they looked at. They made poor investments and were lucky to get their money back or break even. They would have been far better off to borrow additional funds and buy the more expensive property. If you lose vision at the start of the process, you won’t be able to examine the real assets of the real estate you’re purchasing. Look at all the positives and negatives connected with the property and get a feel for the real net value. Just as a low price doesn’t mean good value neither does a higher price. You need to investigate.
I’m sure you’ve heard someone say, “They are asking way too much for that property.” I’m sure you’ve also heard “They got that property for a steal.” What would give those folks the idea someone paid too much or too little for a parcel of real estate?
Was it the fact that someone bought it two days after it was listed?
Was it the fact that the listing price was higher or lower then what seemed to be for the same type property?
Don’t let listed prices fool you. Don’t think because the licensed Realtor or a licensed appraiser helped establish the broker-listing price that this must be close to what the property is worth. Don’t get fooled thinking that the listing price has anything to do with the property’s real value. Everyone wants to make the most they can on their sale including the listing agent. The Real Estate broker will usually advise you on what they think the market will bear based on comparable sales, but what kind of in depth analysis are you going to get for $150.00-$300.00 on the comparison of the properties? So you can see, the listing price is a guesstimate at best. What does, “what the market will bare” have to do with the real value of the property? Nothing at all. Now the bank sends out their man the “appraiser”, whom for $150 to $300 is going to give you his opinion, really the bank’s opinion, on the property’s value. The bank’s “opinion” on the property’s value has to do with what can the bank sell this for on a quick sale if the borrower defaults on the loan.
A real oxy-moron is Bank Appraisal. Appraisal means finding the value. What Bank Appraisal actually means is someone hired by the lending institution, who is placing a monetary value on real estate for the lending institution, based on a set of rules and guidelines established by the lending institution, unreasonable to the real evaluation process but accepted by the lending institution.
The bank won’t recognize any value for location, such as closeness to schools or access to major thoroughfares or lack thereof. No consideration is given for single level or bi-level dwellings, neighbors, viewsheds, noise & air pollution, trees, streams, wind protection and water protection such as a harbor. There is also no consideration for taxes or the economical health of the community as to which direction it is heading. All of the above will have an affect on the value of property you’re purchasing or selling that won’t be recognized in a bank appraisal.
Remember, a bank appraisal is for the bank so it can determine the amount of money they want to borrow to you based on a price that will ensure a timely sale should you default on your loan.
Don’t get me wrong, they are establishing a value under their industry licensing guidelines set by the lending institution. Why is there money made in Real Estate? The simple answer is someone saw the real value of a piece of real estate and acted on it. Either you have the ability at a young age to recognize true value and/or through years of actual experience you have gained insight to recognize true value or you need to trust somebody to help you find these values.