When looking to purchase a home, it is important to make sure that you are doing as much research as possible. By becoming an educated buyer, you are able to make the transaction go as smoothly as possible.

In Dottie Herman's recent broadcast of "Eye on Real Estate with Dottie Herman", she goes on to discuss the three most important aspects to purchasing a home. There are three main components that make up the "worth" of the home, according to Herman.

Herman generally begins her segment by answering listener questions about whether a home is worth its list price. She teaches her listeners how to determine what the correct price to offer is.

One of the pieces of advice that she gives many times over is that it is important to hire a real estate broker. With the real estate broker, all of the guesswork is taken out for you. This is because it is the broker's job to know the market, understand the property you desire and to find them.

When you finally find the best broker for the job, you need to research the attributes you are looking for in a property, then finalize a budget and then begin the search for your new home. While you are out there looking for a home, Herman suggests that you consider the value, the cost and the price. Remember, even though it might seem a little confusing, these are not the same thing.

Value

Herman goes on to explain, “It’s an opinion of what you think the home is worth, based on how you are going to use it.” The value of a home is calculated on a very personal level depending on a person's lifestyle.

Cost

Herman states that many sellers are in a habit of believing that the cost of their house should be what they paid for it plus all of the improvements that they have put into it over the years. However, as Herman explains, "Cost is [just] a measure of the past." What is in the past is just that – in the past.

When you improve your home, such as upgrading the bathroom, you are increasing the potential "value" of it for someone, but you are not increasing the actual "cost" of it.

Herman stresses, “Cost and value are not what the price of the home should be or shouldn’t be.”

Price

“Price is what the home should be worth today. But sometimes people don’t price it right, so what you really want to look at is fair market value”, Herman explains about determining if a home is priced correctly.

Of course, there are other things you might want to consider when looking at potential homes for yourself. Such things include the neighbors, the view, and the overall position of the home on the street. This is your chance to make sure that you are getting the best possible property.

You do have your broker to help you with a lot of this. He or she will be able to help you find out a lot of specifics about the property and neighborhood. Make sure that you are discussing all of this in detail with your broker and that you are visiting the home on your own as well. Remember, as Herman states, "There is no exact science to pricing." Therefore, you are going to want to take your time and go with what feels right to you.

 

Article courtesy of Douglas Elliman, brokers for Brooklyn Real Estate