Real Estate Value: Analysis of Real Worth
Real estate is one of the most valuable investments you can make. Real estate in New Jersey is especially valuable. There are many reasons why real estate can be valuable, but the age-old adage is usually right: Location, location location. At ERA Othello Realty we look at all the criteria that make up real estate value.
Real estate can have value because it's valuable to a specific individual, but overall the value of real estate is what the general public (in the market) will pay for it. A residential home's value can have many pluses and minuses, but if all other things remain the same then the location determines the price.
There are different criteria with different types of real estate that determine what location is valuable for a specific piece of real estate. For a commercial property it might be important to be on a main road with a lot of traffic. For industrial real estate it might be important to be near railway lines or away from high traffic areas.
For residential real estate it becomes more complicated. "Residential real estate" means someone's home. A home is the most personal piece of real estate and, usually, the most important real estate that s/he will ever own. There are many reasons why one location will be more valuable than another.
Schools very often are the driving force behind a person's determination to stay in a specific place or to move to a specific place. In this case "real estate location" is something that isn't a specific "vicinity" issue but rather a municipality issue. So this piece of real estate will have a different value for someone with children than for someone without children. So a good school system will only drive up the price for certain people, as such it only has a partial affect.
Transportation is a huge factor for people who need to travel to work. In Central New Jersey, which includes Middlesex County, Monmouth County, Mercer County and parts of Ocean County and Burlington County, people very often need to travel to Northern New Jersey or New York City. If the home is close to a major thoroughfare, such as the Garden State Parkway, The New Jersey Turnpike, Route 1 or 9, it can have a very positive affect on desirability for long-commuting buyers.
Mass transit is also an important factor to commuters who use it. The New Jersey mass transit system brings millions of commuters north every day and certain people will pay more to be close to it.
Some people like their homes very secluded, surrounded by a lot of land and some people like their homes in a cozy development. As a general rule, though, the more land, the more someone will pay for that piece of real estate.
The size of the house has one of the strongest impacts on the value. A small house on a small piece of land has a much lower real estate value than a medium house on a small piece of land. This is obvious. There is a time, though, that a house too large for the land can reach a peak with it's real estate value.
A combination of land and home size is second to location in real estate value. Let us not forget about the condition of the total piece of real estate. The real estate condition is usually on the home itself but it can also be on the land. A nice manicured lawn with a lot of nice trees can be a boon to the property's worth.
The condition of the house itself is very important. A house that needs some "TLC" (or tender loving care) has amuch lower value than a house that is "as new." While this might be obvious, it should also be obvious to a home seller that they should fix up their house as much as possible. The same idea of "an ounce of prevention is worth a pound of cure." Making sure the paint is perfect, the carpet nice, no cosmetic flaws can have a much larger value -add than the cost of fixing it up. It's not always the case, but it usually is.
New Jersey is called The Garden State for a reason. It used to be much more rural. Parts of it, mainly in Southern New Jersey, are still much more rural. As the New York Metro area grew, though, it transformed Northern NJ, and now Central NJ into a more suburban locale. This, in turn, has driven up real estate values. The NJ Real Estate Market has surged incredibly these past 10 years.
As NYC real estate prices have climbed people have started to move out of NY and into, relatively, cheaper New Jersey. These cheaper suburban real estate prices, in turn, have attracted more people, which drives up real estate demand and real estate prices. When the prices in Northern Jersey go up people look further south into Central Jersey and then the cycle repeats itself. But, in general, the prices of central and south New Jersey are cheaper than northern. Central NJ is cheaper than South NJ.
So, in review, here are the important criteria for real estate value:
* Real Estate Location
* Real Estate Condition
* Real Estate Size
* Real Estate Vicinity
* School Districts
* Transportation (Roads)
* Mass Transportation
I hope this real estate tutorial is a help in your next real estate purchase or sale.
Copyright 2005 Cy Yablonsky. Cy Yablonsky is an Associate Realtor with Othello Realty, you can visit Othello Realty at NJ Real Estate. Feel free to reprint this article but you must include this paragraph and all links must be live and working, no changes can be made.
Mortgage Pre-Qualification vs. Pre-Approval: What's The Difference
It is important that you understand the basic difference between being "pre-qualified" or "pre-approved" by a mortgage lender as you are looking for a home to purchase. A pre-qualification is not the same as pre-approval. The buyer, seller, and agents involved in the transaction need have the same agreement regarding the buyer's ability to close the purchase.
Your realtor will want you to talk with a mortgage company as soon as possible. The reason is that the realtor needs to know the top price range you can afford and housing expense you are comfortable with. It also helps your realtor when presenting an offer to the seller's agent to show that you have taken steps to approval. It may very well help persuade the seller to accept your offer. In many housing markets the pre-qualification or pre-approval letter is accepted as part of the purchase presentation to the seller's agent.
. When you are speaking with a loan officer to be pre-qualified you are giving information about your financial condition. The loan officer will also ask questions regarding your credit. There may even be a credit bureau drawn to see where you stand. Then the loan officer will give you an opinion of how much you can afford based on the information you have told that person. This is not a commitment to make the loan! You should be given a letter that states the pre-qualified mortgage amount and type of loan. It should state further that loan approval could be issued after the information you gave is verified & formally underwritten.
When you receive a pre-approval it has more weight than a pre-qualification. The pre-approval letter will give the maximum loan amount with the specific details of the total mortgage. It should have only conditions such as clear title report, underwritten appraisal, general closing conditions and no negative change in your status as a buyer.
If you are serious about buying a home, and you are satisfied with the mortgage company, you should get as solid a pre-approval as you can. You don't want any surprises along the way.
Home Buyer- Get A Home Inspection Up Front
Well, you finally found the perfect home. You are filling out the purchase sales agreement. You figure you have enough for the earnest money deposit to be placed in escrow and the lender will want the appraisal fee up front. But now the realtor is advising getting a home inspection. That's extra money. The home looks great. Besides, won't the appraisal come up with any problems?
Buying a home is normally the single most expensive purchase you make. You want to make sure the condition of the home is what you expect. A licensed home inspector is an impartial party to the transaction. The inspector will evaluate the home as is. You will have a written report on the spot or within days.
Saying the obvious- it is important to read the report. It will give the condition of the structure. It will address the electrical, plumbing, heating and air conditioning. There will be a section on any evidence of infestation of pests and dry rot. There will be other sections. Pay particular attention to any items the inspector recommends be corrected. If there are areas such as attic or enclosed area that the inspector found inaccessible that should identified on the report.
You can find a qualified home inspector in the yellow pages, Internet or your realtor may have a list of several to choose from. The home inspector is working for you because you are paying for the work. The appraisal is done for the benefit of the lender to determine market value. By making the purchase of your home contingent on a satisfactory home inspection report you are protecting yourself from expensive repairs that should have been done by the seller before the home went on the market.