St. George Utah Real Estate

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Local market factors affect whether buying a house is a good investment. A home is primarily a place to live, but truth be told, most homeowners hope to make a profit, known as a “capital gain,” when they eventually sell their home. Sometimes, those hopes are realized; other times, homes are sold at a loss or perhaps just at break-even after the transaction costs are paid.

What Determines House Prices?
House prices fall under the principles of supply and demand. The value of an individual home depends on the location and condition of that home and how desirable it is to local buyers. Yet other factors, such as population growth, construction of new housing, the local job market, the relative affordability of rental housing, mortgage interest rates, household incomes and property taxes, all play a big role in home values. Savvy buyers and sellers know these factors can make a big difference in the price of a home and whether or not the home is sold for a financial gain or loss.

Population And Job Growth Boost Demand For Housing
Population growth generally translates into higher home prices since more people create more demand for housing. An influx of new residents and increased household formation (when young people move out on their own) are two examples of factors that increase demand. Many coastal cities have experienced strong population growth and higher home prices in recent years.

Cities that have relatively high unemployment or a net loss of jobs over time may experience weak housing markets and lower home prices while cities that have a growing job market, high-paying jobs and rising salaries and bonuses tend to have higher home prices. The presence of major employers who relocate large numbers of workers into the area can contribute to higher home prices as well. Detroit is an example of a city where loss of jobs has depressed home prices.

Construction of large tracts of new homes also can impair the prices of existing homes since those new residences add to the supply of available housing. Cities such as San Francisco and Boston where the supply of vacant land is limited and empty lots are expensive tend to have higher home prices as a result.

Strong Markets Mean Fatter Gains
For buyers, market factors may influence whether they opt to purchase or rent a home and, if they decide to buy, how much money they’ll need to spend. For homeowners, these factors may affect the timing of when they decide to sell their home and whether they’ll then purchase another home or become renters.

The bottom line is that a profitable home sale is more likely in a locale where market factors are positive for housing. Population growth, strong employment and a limited supply of land all increase the chances of home price appreciation.

If you’re having trouble landing a buyer for your home, maybe you need better bait. A soft real estate market is a lot like the breakfast cereal aisle at the supermarket. Suppose you have two virtually identical boxes of corn flakes. They both offer the same nutritional value, similar taste and can be had for the same price, but, if you had to choose, chances are your hand would gravitate towards the box that that has the Secret Decoder Ring inside.

Crafty home sellers know incentives are the prize at the bottom of the box. By offering buyers something a little different, they can improve their chances of selling their homes quickly and for the price they want.

Here are just a few of the ways home sellers can sweeten the deal with extras:

• Cover the buyer’s closing costs
• Many buyers, preoccupied with saving enough cash for their down payment, overlook their closing costs which, at between 3 and 6 percent of the sale price, can amount to several thousand dollars extra. Offering to pay them on behalf of potential buyers may be just the push they need to close the deal.

Help The Buyer Get A Better Mortgage Rate
Another potential deal sweetener is to offer to purchase discount points on the seller’s mortgage. Discount points are purchased up front in order to secure a lower interest rate on a mortgage – the more that are purchased, the lower the rate. In most cases, one point is equivalent to one percent of the loan amount and will reduce the interest rate by .25 percent.

Discount points may make your home more attractive to buyers in that their monthly payments over the life of the mortgage will be lower. Plus, it enables you to advertise your home with the offer of “below market financing,” which may draw in more potential buyers.

Throw In Some Freebies
If you’re planning to purchase new furniture, appliances, curtains or light fixtures for your new place and the ones at your current home are in good condition, try including them as value-adds in your purchase agreement. This works particularly well with first-time homebuyers who may not have much furniture of their own. Plus, leaving some things behind may even reduce the overall cost of your move.

If you don’t want to part with any of your possessions or fixtures, another low-cost incentive is to include a home warranty. Offered through insurance companies for around $400 (depending on the extent of coverage), home warranties are contracts that cover the cost of replacing or repairing major appliances that break during the first year after the sale of the home. Plumbing, electrical and heating systems may also be included under the home warranty.

Other attractive incentives that may lure buyers in are gift certificates, golf club memberships, airline tickets and even cars. These types of incentives do cost money, but they can go a long way in helping to get your home listing noticed. You may also consider offering them to your real estate agent as an added incentive to finding a buyer.

Overcome Objections Or Problems
A less glamorous but often equally effective tactic to help close a sale is to offer to rectify any concerns a potential buyer may have with your property. Something as simple as offering to repaint the front steps, re-sod the lawn or adjust the move-in date might push a potential buyer off the fence. You can either offer to make the improvements yourself or to include a renovation allowance in your purchase agreement.

A home value estimate is a great tool to help you determine the right listing price for your home. So you’re about to put your home on the market but are unsure of its current market value. A good place to start is by getting a home value estimate (HVE). This is an automated report that relies upon complex algorithms and public records to estimate your home’s market value.

A home value estimate is not a direct substitute for an agent-performed Competitive Market Analysis (CMA), which draws on your agent’s expertise as well as recent sales figures for similar homes in your area. While an HVE also uses sales statistics in its calculations, it relies on public databases and so may use slightly different numbers. Still, while not perfect, it’s an easy way to get a quick idea of how much your home is worth.

The Pros Of Home Value Estimates

• User-friendly, usually requiring only an address and other simple information
• Usually inexpensive (and sometimes free), depending on the depth of the research and how quickly you want the report
• Can provide data that is not included in a competitive market analysis, such as property information, a description of comparable properties, the home’s tax value and community features such as demographics and price trends.
• Doesn’t rely on anyone’s judgment, so it may be more objective than a CMA that requires input from an agent

The Cons Of Home Value Estimates

• Doesn’t always deliver the best conclusion because it does not factor in features such as upgraded finishes, which an agent would acknowledge and take into account
• Relies on public records, which may be inaccurate or incomplete
• There’s no reason why you can’t get both an HVE and a CMA – especially since they are bother either free or inexpensive. Compare the results when setting your listing price. If the results are similar, you’ve got a good starting point to decide price. If they are significantly different, speak with your agent to find out why.