Today's Market Is All About
VALUE
Conventional Wisdom suggets that the best prices are found in lists of Foreclosures and Short Sales, and, when you are talking about just purchase price, that may well be so.
But purchase price is only part of the total cost of a piece of land, or a home. So, while you will see some foreclosures and short sales among our "favorites" you'll also see homes and land that do not fall into these "distressed" categories.
That's because determining the value of a piece of property involves considering at least three things:
--Purchase Price is the obvious first item
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But unlike a certain model car or TV set, the very nature of every piece of real estate is unique. Two cabins may have identical floor plans and they may even sit side-by-side on almost identical lots. If one cabin is priced $1,000 less than the other, then it appears to be the better value. But in such situations, one will invariably feel diffenet from the other.
Which brings us to:
--Utility value, or Return on Happiness, ROH for short.
A very simple example: say that the view from Cabin A's deck deck includes the neighbor's shiny white propane tank, while the view from Cabin B is into a very steep gulch where it is impossible to put such a tank. If you are a successful propane dealer, you may see that tank as an emblem of your success, so it will make you smile. Buying the more expensive cabin will add $5 to your monthly payment. Is a visible reminder of your success worth $60/year to you? Likely so.
What is white propane tanks offend your aestheric sensibilities? Is not having one in sight worth $60/year. Again, likely so.
In reality, the differences between properties are myriad, so evaluating ROH is a more nuanced process than this.
--Sale Price.
Not even the best chrystal ball will give you this information, but there are some pretty good indicators. Areas with lots of foreclosures and short-sales are likely to take longer to increase in value than those with few or none. Ditto houses that have neighbors who maintain their properties well. Whether you intend to put your cabin in a rental program or not, homes that have good rental potential are likely to sell for more than those that do not. Like ROH, there are many issues to consider here.
A careful analysis of criteria like these may indicate that the more expensive of two similar properties is the better value. Or not. Doing the analysis takes some effort on both your part and our's, but we think it's a requirement in today's market.
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