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(English) What You Want to Hear vs. What You Need to Know

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4 comentarios
  1. David Mott
    David Mott Dice:

    With broad brush strokes, home prices everywhere are supposed to decline or rise by some amount. What could be the actual price floor?

    What about using your insurance rebuild rate? Cost of materials + local labor rates, etc. are how rebuild rates are derived. Included in this amount might be demolition and removal, but also NOT included is the value of the lot (as far as I know). Lot location and value can vary quite a bit. If you include the lot value into the rebuild rate, you might find that the rebuild rate is actually cheaper than purchasing a lot and having a home built on it.

    Here’s a for instance. I have a half acre lot and a 2200 sq ft home. The insurance man says that the rebuild rate (Oregon) is $130 per square foot. That’s a $286K value.

    If I use the county tax value on the lot alone at $97K, then this means that the house is worth $189K, or about $85 per square foot (psft).

    The big question is then: Can you get the house built for $85 psft? That may depend on what is involved in constructing the home. This site gives an average of $118 psft: http://www.b4ubuild.com/faq/faq_0002.shtml

    So, using their average, 2200 sqft costs = $260K. Is the lot included? That was only a question in the article. I don’t think it does.

    $260K vs a $286K rebuild cost means the lot is now worth $26K, not $97K.

    So, you can see that using the rebuild rate as a price floor is more than generous in most cases.

    Hoping for prices to fall below a rebuild rate is like hoping for your property taxes or your insurance rebuild rate to fall. I just don’t see that happening.

    One more thing to ponder: You will never see a chart showing price fluctuations in real estate with an accompanying chart of population growth. Why is that?


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  2. […] market time and cause much frustration.obtain your listing. It is important that an agent tell you what-you-need-to-know-vs-what-you-want-to-hear, and be able to support their recommendations with facts and legitimate, recent comparable […]

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