What a Seller Paid Has Nothing to do With Real Estate Prices
Buying New Orleans Real Estate
When it comes to New Orleans real estate, we often encounter buyers who tend to focus on comparing the asking price to what the owner paid in the past, regardless of how long ago it was.
But, let's be clear: there are several reasons why the seller's purchase price should not influence what a buyer should see as a fair offer.
Markets and values change
As you may already know, home values can fluctuate based on supply and demand. Take, for example, what happened in New Orleans post-Katrina. On the West Bank, houses sold for significantly higher prices in October 2005 compared to July 2005. Similarly, when the condo rush hit the Warehouse District in 2016, prices shot up by more than 40% in just 18 months. Interestingly, these events didn't take into account what an owner originally paid for their property.
Improvements = Value
This is for all the folks out there searching for renovated properties. Just because an investor managed to snag a house for a great price doesn't mean they didn't put in significant time, effort, and money into the remodel. Remember, the purchase price has absolutely nothing to do with the final result and value.
PRO TIP: Some savvy buyers have started looking into the permits pulled by renovators to assess the value of the renovations. However, what many forget is that permits only cover a portion of the costs. There's also the valuable time (which equals money), skilled labor (which is even more money), and additional improvements (which also pile up the expenses) that didn't require any permits at all.
Your REALTOR Can Help
At our agency, pricing is our expertise. Before our clients submit offers, we make sure to provide them with comparable sales information and have a friendly discussion about the listing price as well as the selling prices of similar homes.
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