Tuesday, October 17, 2017

Why First-time Homebuyers Must Start Research at a Top-down Valuation Site

(Click on the image to enlarge)

A Top-down home valuation site is one that allows users to work up the value of a "simulated" home without having to deal with a series of random comps. A good Top-down site generally offers the following features:

1. Sub-markets: All (socio-economically) prominent sub-markets with the market (say, Orlando) are generally supported, allowing users to toggle between sub-markets to evaluate and understand the variations in home values.


2. Home Type and Style: Home types (Detached, Attached, HOA, Townhouse, Condo, etc.) and styles (Ranch, Cape, Colonial, Conventional, Contemporary, Tudor, etc.) are important consideration for home-buyers so a good Top-down site should incorporate them.


3. Location: A good school district would fetch higher value that its counterpart with lesser known schools. Good sites allow users to understand how such qualitative factors contribute to home value.


4. land and Building Sizes: Users are allowed to educate themselves how the changes (increase/decrease) in sizes impact values within a given sub-market. Some sites would allow users to further differentiate between total improved area and heated area, corner lot vs. non-corner, etc. Bath count is also important as it helps understand if the home is optimized or a lifestyle one.


5. Building Age and Condition: Users can quickly learn how age and overall condition (including quality of rehab) impact values in a sub-market. Some sites might combine these two variable into one called effective age. Either way, these are important considerations in pre-owned homes.


6. View: A waterfront home could fetch significantly higher value than a non-waterfront one within the same sub-market. Similarly, a house with other enhancing views (park, bridge, skyline, golf course, etc.) could be pricier.

7. Amenities: Central A/C, In-ground Pool, Upgraded Porch, Tennis/Basketball Court, etc. often add value to homes so a good site would allow users to experiment with such options as well. 

Case Study

Our First-time Home-buyer = John Doe


John must be methodical in his research leading to the home buying. After a pre-qual of $300K, he has decided to focus on two Orlando-area sub-markets: Maitland and Winter Park. 

He finds a Top-down site which allows him to perform his research without having to work up some random comps. He realizes that while Winter Park has beautiful tree-lined streets, he gets more modern and slightly bigger homes in Maitland (a screened-in Pool could be a bonus). He is very happy that the site allows him to evaluate numerous possible combinations including location, type, size, style, amenities and view. He also notices that the site meaningfully curves values as home size increases.

I picked the above graphics from Homeyada.com as I own and operate it, to avoid having to deal with any copyright issues. My Homeyada site is totally self-directed (no modeled values), Mobile-friendly (no separate apps are needed), totally free (no strings), and requires no login or registration whatsoever. It has a built-in non-linear value curve/scale tied to the home size.



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