Pricing your home to sellMost people guesstimate the value of their home by thinking about what a neighbor sold their home for a year ago. Other common methods are the “zestimate” on Zillow and the assessed value provided by the city or county assessor’s office.
By: By Jim Ronding, Superior Telegram
Most people guesstimate the value of their home by thinking about what a neighbor sold their home for a year ago. Other common methods are the “zestimate” on Zillow and the assessed value provided by the city or county assessor’s office. These methods may serve as a rough idea of value, but are not always a reliable benchmark in the current market.
A better method is to contact one or two Realtors who have recently listed or sold houses in your neighborhood and request a Comparative Market Analysis from each of them. This analysis is generally provided free of charge.
By using the Multiple Listing Service (MLS), Realtors have access to data on homes that have recently sold as well as those currently on the market. They’ll use criteria such as location, size, number of bedrooms and bathrooms, home style, and condition to select comparable properties. An agent will then use the comparables that he or she comes up with to assist you in determining the market value and pricing of your home.
Pricing your property correctly is crucial. You want to sell your property in a timely manner at the highest price possible. Current market and property conditions play a key role in determining the value. Pricing your home too high or too low can cost you time and money. Realistic pricing will achieve a maximum sale price in a reasonable amount of time.
Some important factors that are used in determining a listing price are:
The prices of neighborhood homes actively on the market and the prices of homes sold within approximately the last six months. The higher price ranges may take a little longer to sell, so we may use information older than six months.
Location. Unless there are limited sales in the neighborhood, the comparable properties will be kept to similar active listings and sold homes in the immediate neighborhood.
If quality comparable properties are not found in the specific area, homes in similar neighborhoods may be used.
Finished footage and lot size. The finished square footage of the home is another important factor in choosing comps. Similarly sized homes in the same neighborhood will generally have similar pricing per square foot. Likewise, lot dimensions play a role in property value.
The distinction of distressed or non-distressed. In some communities the sale price of a distressed home sold at short sale or as a bank owned property may be only 90 to 95 percent of fair market value. Other communities hit hardest with foreclosure distressed homes may take a 20 to 35 percent discount from fair market value. Non-distressed homes on the same block as a foreclosure will take perhaps a 1-2 percent hit in value by association. The distress condition of the house and the neighborhood will often play a part in determining the realistic value of the home.
Number of bedrooms, bathrooms and garage stalls. The bed, bath and garage stall count do not matter as much as square footage inside the home, but will be factors in determining what potential buyers will look at. Most buyers with families look for three or four bedrooms and two bath single family homes. With the right square footage, however, a family can often easily add or modify bed and bath space to meet their specific needs.
Age and updates. Comparable properties are generally in the same age range as the subject property. However, significant updates may add value in comparison to homes the same age.
Home style. For the most part agents will try to choose comparable properties with similar styles such as two-story homes with other two-story homes and ranches with other ranches.
The market analysis takes into account the amount received from recent sales of comparable properties and the quantity and quality of comparable properties currently on the market. The desired end result is to find a price that will attract a willing and able buyer in a reasonable amount of time.
Seasons may have an impact on pricing slightly, but even in the winter months we are selling houses around here. If your house is being shown in the winter, chances are the buyer is very serious. Don’t let the seasons fool you — they don’t change the value as much as some think.
Timing is crucial in the real estate market. A property draws the most interest and excitement from potential buyers and the entire real estate community when it is initially listed. For that reason, it has the highest chance of being sold when it is new on the market. When you choose a realistic price from the beginning, you can better take advantage of the excitement and decrease the time your home is on the market.
When a home is overpriced from the get-go, agents and buyers tend to pass it by and pursue better deals. As it is on the market longer, less traffic is generated at the initial price level and it becomes necessary to consider a price reduction. Depending on the conditions of the market, this cycle may repeat several times before an offer is made, resulting in a sale price that ends up being well below the initial listing price. Buyers’ suspicions of problems with the home increase as time goes on.
In a buyers’ market such as we have today, many of the finer details, finishes and special features such as a professionally landscaped garden, tend to wash out in the comparison and in the minds of buyers. They are indeed positive elements that may help the house sell faster, but they will not dramatically raise the value over the competition.
“Buy low, sell high,” is the mantra in every market throughout history. Put yourself in the buyer’s shoes and make an educated pricing decision. Consider setting up a price reduction strategy with your agent to maximize your sale. An experienced agent who knows the market and the marketing process can help you determine the market value of your home, thus giving you the best chance of quickly and smoothly selling your home. Without an agent you are on your own.