Your Home's Value
Your Home's Value
Estimating the value of residential real estate is not mechanical. It is not about bricks and mortar, rather it is the psychology of estimating a future event (the contract price) based on a prediction of interaction between humans (buyers and sellers). Typically, buying a home is an emotional decision which is justified by logic.
Properties that are on the market are the ones I call "hopefuls." That means the sellers have priced the homes and are hopeful that their home will sell. Their house pricing may or may not have a basis in reality.
On the other hand, the closed and sold properties are factual: a buyer bought and a seller sold; a handshake took place and money changed hands. As such, this hard market data cannot be ignored. In fact, it is the sole basis on which lenders' appraisers estimate value for mortgages. The shortcoming of closed and sold data is that it is historical. Not only has it happened already, but a period of time took place between the "meeting of the minds" (contract date) and the settlement date.
