All home buyers have one thing in common: they do not want to get ripped off. In today’s increasingly busy housing market, sales have risen to 5.46 million, which, according to the National Association of Realtors, is 7.7% higher than last year. In this busy market, it’s especially important to make sure that you’re getting the right price.

How do you know if you’re getting a fair value? Even if you’re in a tight market, you can figure out if a home is priced fairly before you make the offer. There are certain ways you can evaluate whether the price of any home is a sound investment or if you’re getting ripped off.

First of all, look at recently sold comparable properties. Comparable properties are similar in size, condition, neighborhood, and amenities. Your real estate agent is your best resource for accurate, up-to-date information on comparable properties, also known as comps.

You should also look at comparable properties that are currently on the market, under contract, or not selling at all. If a comparable property failed to sell because it was overpriced, the property you are interested in is probably overpriced too.

“Look at comparable properties to see if the home you want is priced fairly.”

You also have to consider the appreciation rates in the area. Are prices going up? Are prices going down? What do the days on the market look like? If you are in a seller’s market with very low inventory, high demand, and low days on market, you will have a better idea of what a seller is willing to accept. In an appreciating market, you can buy now and reap the benefits of further appreciation down the line.

If you are in a market with high days on market, lots of inventory, and very little demand, then you know that prices are starting to depreciate. In that case, make sure you buy 5% to 10% below the market value so that you don’t lose value as prices continue to drop. In depreciating markets, you need to buy your equity up front in order to make the best investment.

If you have any other questions about determining market value or about real estate in general, give me a call or send me an email. I would be happy to help you!

With that in mind, today we’re joined by Mark Allen from 1st Capital Insurance to explain the basics of what sort of insurance plans you should investigate and the typical costs of obtaining them.

According to Mark, the number one thing that Lowcountry residents need to look out for when looking for insurance in a home are the deductibles. What are they covering? There are differences between an ‘all other peril’ (AOP) deductible and a ‘wind and hail’ and/or ‘named storm’ deductible. The named storm or wind and hail deductible is normally a percentage of your dwelling. For example, let’s say you have a $300,000 house and you have a 2% named storm or wind and hail deductible. That means your cost would be $6,000. The all other peril deductible has to do with fire, vandalism, theft, water damage, and other things of that nature.

As to how much flood insurance costs, it depends on your house’s location and its elevation. Normally people in Mark’s business get what is called an “elevation certificate,” which tells them how high the house is and how well the house is vented so that they know how much to charge appropriately.

To Mark’s estimate, the typical cost of a flood policy for a $300,000 to $500,000 home would be around $500 a year, which covers $250,000 on the building and $100,000 in contest. That’s the maximum that FEMA allows. You can get other policies that cover you over and above that, but that’s the typical FEMA policy.

“Lowcountry residents need to be mindful of deductibles.”

For homeowners living around water areas, Mark’s advice is to watch for how much the house would cost to rebuild, because that’s what insurance companies measure to determine their rate. If you make any major changes or renovations to your home, make sure to call your insurance company and update your policy information.

Stay tuned for part two of our series with Mark where we’ll cover the business of homeowners insurance in greater depth. In the meantime, if you want to get in touch with him, you can call his office at (843) 216-2772 or visit his company’s website at www.1stcapitalins.com, or email him at Mark@1stcapitalins.com.

If you have any other questions, feel free to give me a call or shoot me an email. I look forward to helping you!