How to Correctly Value Homes Amid a Tumultuous Market
While interconnection between people, places, businesses, and marketplaces have rapidly increased the speed at which we can adapt to new conditions and circumstances, so too has interconnection allowed more information to be accessed by more people, more quickly. This process of information overload, or information saturation, has actually progressed to the point that humans can no longer effectively keep up with constantly shifting variables, conditions, and market segments.
Nowhere is this more clear than on Wall Street: today, the world’s biggest stock exchange consists largely of computerized bots trading stocks with other computerized bots in fractions of seconds: much more quickly than humans are able to receive new information, process the implications on their own business, and shift their trading strategy accordingly. While Wall Street and the financial markets are an extreme example of this process, the same ideas can be applied to the business of valuing and selling a home or other property.
Under old market characteristics, humans were able to effectively understand what was driving the price of their home up or down, and re-price their home based on those criteria. An influx of new businesses to an area would drive prices up, while a natural disaster or discouraging economic forecast would drive home values downwards. However, in the rapidly shifting, information saturated environment in which we currently buy and sell property, individual investors no longer have the ability to interpret and adapt to these changes as quickly as the rest of the market.
Instead, because of all the information available to home- and property- owners, they may find their prices lagging behind the larger market conditions when they attempt to price and sell their property. So how can today’s property owner avoid being forced out of their market, when the competition is constantly updating their pricing and strategies in fractions of seconds? The answer is fairly simple, though implementing it may not be: property owners simply need to devote more resources to the cause.
While property owners and real estate investors themselves may not have access to the expensive and highly specialized computers that allow for in-the-moment adaptation of pricing data, they do have access to larger property management groups that do. While one person can’t possibly be expected to stay up to date on changing market conditions, weather patterns, economic data, and the like, it is reasonable to expect a team of hundreds of people, employed by a large property management firm, to stay up to date with all of this information in something approaching real time. If they can’t, the property management firm likely has massive computer programs that can deal with many inputs, see the effect of many variables, and produce many outputs available to property owners looking to value their homes.
So how can a homeowner with no idea what market conditions affect the price of his or her home, hope to accurate determine and forecast the price of his or her property amid such a rapidly changing market? Most likely, the best way to approach the problem is to contact a large property management firm with the resources described above that will take simple information about a house and translate it into a complex pricing forecast determined by multiple market conditions. These firms help small time investors and even simple homeowners determine the value of their property every day, and have both the manpower and technological prowess to quickly and confidently determine the price of a home. And if a homeowner already has an estimate of their home’s value, but would like to ensure it is accurate, they too can contact a property management firm and get a second opinion.