Is Their Asking Price Appropriate

If you're ready to purchase a new home, understanding the value of that property plays a critical role in the process. The asking price for a home is not always equal to its fair market value; because we finance new home purchases, it is important  to determine the actual value of the home to get the correct financing for the value.  By consulting with real estate professionals, property appraisers, and mortgage lenders, you can determine the actual value of the home, regardless of the listing price. It is important to establish the FMV (fair market value) of that specific house you're interested in, since this price could be lower than the asking price, giving you an advantage when making an offer.

The price which the home you are looking for should sell for is called its Fair Market Value (FMV). The FMV is based on criteria such as square footage value, upgrades, assessed value, and a comparative market analysis (CMA). The CMA is calculated by comparing other homes on the MLS (Multiple Listing Service) either in the neighborhood you specify or by the attributes of that particular house. They look at houses already sold as a determination of accurate pricing. The square footage value gives continuity to some of the variables of houses in the same neighborhood; such as lot size or improvements needed/completed. Assessed value adds a third dimension to give a comprehensive picture of what the fair market value is for a home.

The home sale price is what the seller of the home is asking the buyer to pay in order to purchase the home. This includes the financed amount and the amount of the down payment. In a previous week's blog, we discussed the advantages of mortgage pre-approval. Through this process your mortgage lender will assess your financial situation and calculate a maximum affordable sale price. This indicates what mortgage amount you can realistically afford. Assuming you enter the home buying process with a pre-approved mortgage amount, knowing the fair market value of the houses you are interested in will allow you to align your financial picture with the right property.

Often people think a house is out of their reach because they can't afford the asking price. What they may not know is that with the help of mortgage and real estate professionals, they may be able to own the home they want in their desired neighborhood by understanding the Fair Market Value. At Intercoastal Mortgage Company, we help you secure a loan that fits your needs, based on your income and budget. Homeownership is a phone call and application away, so contact me to help you in the loanprocess and obtain your next home.