Your house may be worth more yesterday than today…..and it may be worth more or less tomorrow than it will be the day after. WHAT?? Am I crazy or what?
Nope. Not crazy. Not at all. In all reality, the value of your crib fluctuates just like the value of stocks do. I am sure you’ve seen the news or read in the paper how the Dow Jones goes up and down at least a little everyday. Not that I have done any research on this, but I am pretty sure that there has not been one single day of trading that the value of all those stocks involved stayed the exact same all day long.
I don’t know why, but we all seem to think that the value of our house is some static number. Now, the small value changes in real estate won’t fluctuate as often nor as wildly as stocks may. That’s because the same share of stock will sell with much more frequency that one individual house will……but the house WILL see some value fluctuation….and it doesn’t matter if it is a good or bad market.
Let me establish some things that will explain why: We’ve all heard that with anything, the value is only what somebody is willing to pay for it. True. But, with real estate, that somebody usually does some research on their own or asks a professional to find out what the place is worth. Whether they do it themself, or have a realtor or an appraiser do it, the research is getting done. Regardless of who does it, what is happening is that they are looking in the PAST for recent sales to determine a current value. An appraiser calls it an appraisal. A realtor calls it a CMA. Either way, all it is really about is using recent buyer behavior to predict current buyer behavior and come up with a probable value.
So that is how the past is relevant to the value of your house. Most people just stop here….Probably because this is all they have seen happen when they were the buyer. Let’s take a look at how the present and the future impact the value of your place.
Let’s say your house is on the market for $250k, and there are 50 houses for that same price in town the day you list it, and, according to recent sales, the house is worth every penny of it. Then, suddenly, there are 100 houses for the same price available? Or the number of listings remains the same, but the number of buyers goes down? You know where I am going here….supply and demand. You may need to change your asking price since the value of your house can change with every new listing that comes on the market. As if that wasn’t enough to deal with, whenever one of those other current listings sells, it becomes a comp, which everybody uses to determine the value of your house.
All of this is happening everyday. There is no static value in real estate.