Buy a Home in Texas: Your Home’s Value and Your Neighborhood
If you are looking to buy a home in Texas, it is a good idea to know which are the best neighborhoods to buy in. This information is not only good to know because you may want to live in an area with a low crime rate and top schools, but also because the neighborhood can tell you a lot about property value. Your home’s value and the value of the homes around it are often connected. Knowing the estimated value of homes in the neighborhood can help you as a home buyer.
Below we will highlight a few ways in which your neighborhood can help you estimate property value while you are looking for the right home to buy and as a home owner.
Estimating Property Value
In the home buying process you may have heard the term “comps” used to determine the value of the property you are thinking about buying. Realtors use the “Comparable” homes in the neighborhood that have recently sold to determine the price at which they will list the home. Comparable houses will generally have these and a few other factors in common; square footage, number of bedrooms and bathrooms, condition of the home, and being sold in similar market and financing conditions.
Making an Offer.
In a competitive market a realtor may list the home below the prices of the comparable houses in the best neighborhoods to drive up the numbers of offers and create a “multiple offer” situation. Homes that are listed higher than comparable neighborhood homes may have fewer bids or even sit on the market longer than anticipated. Knowing the prices of the comparable homes in the neighborhood can help you determine the price of a fair offer.
Determining the Fair Market Value
Once your loan process has begun an appraiser will determine the fair market value of the home and report it to the lending company in their appraisal report. The neighborhood “comps” will be included in the report, along with all of the details used to determine the value. When purchasing a home if your offer is higher than the appraised value you may be able to negotiate with the sellers to meet the fair market value.
The best neighborhoods are highly sought after because they hold the promise of maintaining their value. Homes in these areas can attract multiple offers and drive up the prices as the demand grows for the neighborhood. On the other hand some buyers look to purchase a home at a lower price that is in a neighborhood that may “up and coming.” Many cities in Texas are seeing older homes get renovations to revive some neighborhoods. Buying a home in this type of neighborhood may result in a higher resale value as the popularity of the area grows.
What ever type of neighborhood you have in mind as you look to buy a home in Texas, remember that the neighborhood plays a role in determining property value. Your realtor should be able to help you find the information on the comparable homes in the neighborhood help you get a fair price for your new home purchase.
We are here to answer any questions you have about the mortgage process. If you are ready to buy a home in Texas, we would be happy to get you pre-approved.