Hitting the “Sweet Spot” for Home Buyers
April 6th, 2008 categories: Market Trends
During my teenage years, when I first began to have an interest in the stock market, the book about investing recommended to me at the time was Benjamin Graham’s, The Intelligent Investor. It has been described by many of the most successful traders on Wall Street, as the “best book on investing ever written.” Graham saw a distinct difference between speculation and investing. Investments were defined by Graham as those which “upon thorough analysis, promises safety of principal and a satisfactory return.” He considered those not meeting this criteria as speculative.
These investments should be based on the financial condition of the companies. Graham believed that when a company was available at a discount to its intrinsic or actual value, a “margin of safety” existed that made it a promising investment. Many of us have heard that simple investing advice of “Buy low, Sell high”. Well, that’s exactly the point of Graham’s valuation method.
As we’ve watched the mortgage mess unfold during the past couple of years, more than a few interested friends and associates have asked, “So, do you think it’s a good time to buy a home?” While none of us can predict the future, as we look at the current market, depressed home prices, the huge inventory of homes for sale, and extremely low interest rates, this Spring may be the an ideal time to make that value investment by purchasing a property.
In attempting to value a property, there are a number of factors to consider.
These include:
- Square footage
- Number of bedrooms and bathrooms
- Location
- Includes lot features , proximity to schools, commuting options, and shopping
- Condition of the property
- Home faetures
- Current home inventory
One of the most obvious ways to get an accurate valuation of a home is by contacting a real estate agent. Not only does the agent have an understanding of the local market, but they can also provide the prospective buyer with a Comparable Market Analysis (CMA), which is an accurate current record of comparable homes similar to the subject home that have sold recently, or within the preceeding six months. Generally, the CMA will also include homes that are active, are currently under contract, and those that have been withdrawn from the market during that time period. However, it should be remembered that the “Sold” homes are the ones you’re looking for. These are the only homes on the CMA that indicate the value someone was willing to pay. For those interested in determining where the bargains are in the home market, there are no shortage of resources. Other resources available to determine home values include online resources like HomePrice.net, Zillow, Comparablemarketanalysis, among others.
In attempting to make an informed decision about the home or property your investing in, it’s always wise to do the necessary research to ensure you’re getting the most value for your money. Today’s housing market is a very good one for the buyer or investor looking for a good value. As it is in baseball, golf or tennis, there’s nothing like hitting that sweet spot when executing the swing properly. But that perfect execution depends on proper preparation, set up, and timing. In today’s market, timing is the buyer’s luxury. With today’s market conditions, mortgage rates, and inventory of homes, you’d be hard pressed to find a more intelligent investment than a home that’s for sale.
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