Core value is the bedrock value for your home. It has nothing to do with market value or the asking price or with the price you will get for your house when you sell.
Core value is always subjective to interpretation. Core value is the starting point for setting the asking price.
What are the components for determining core value?
The key components:
1. The Land Value. What is the value of the land without the home and improvements? Determine a high-low range for the basic value of the land.
2. The Replacement Value for Improvements. What is the cost to build this house per square in the current market?
3. The Replacement Cost for Age. The simple formula for determining replacement cost is: Replacement Value divided by the anticipated home's life multiplied by the current age of the house. This nets a value adjusted for obsolescence.
4. The Range of Amenities. The list of amenities can vary so it is best to check your local market's view of amenities. Suggested amenities can include a pool, fencing, outdoor spa, tennis court, and landscaping. It may be difficult to put a value on the amenities, but ask "How much would a buyer value this amenity today in its present condition?"
Bottom Line: The Core Value is now the foundational value upon which you will construct the recommended asking price.
Next week we'll look at other factors when added to the Core Value make up the Asking Price.
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