Helping buyers understand value is arguably the most important job of any Realtor for their client. Helping the buyer to understand not only what the home is worth today, but projecting how outside factors will impact value is hugely important. When looking to build a new home, the valuation process becomes decidedly more complex as much of what will eventually affect the value does not exist.
As Realtors, we are trained to look at values by finding the three most applicable recent sales in the marketplace and more or less using an ‘if a, then b’ kind of technique. In NEW HOME valuations, this typical CMA falls short as there multiple metrics that paint a much more accurate picture of the new home’s value. These metrics can also be used as negotiating tactics to show where the home’s value truly is.
When you are looking for a new home, your agent should be able to express to you:
- The relationship of lot price to home value
- The amount a value an area attaches to new homes over existing homes (this varies more than one would expect)
- Market balance
- Historic absorption
- Neighborhood and area norms
- The impact of school districts
At the end of the day, a new home should cost more than a competitive new home; the question becomes ‘HOW MUCH more expensive?’ If you know the questions to ask, the answer becomes obvious.
