What is my home worth?
The question of what your home is worth is easy, right? Our homes are priceless, weighted heavy in memories made of gold, value indefinable by monetary standards. Except that when it comes to selling our homes, establishing a price for our prized property requires stepping outside our rose-colored lenses and looking at the cold, hard facts. Understanding what your home is worth requires pulling data from a series of sources and dissecting it like the science project it is. It's important to establish upfront that the questions of what your home is worth and what you need to sell your home for are not one and the same. Value in this case is determined by the conditions of the market you are selling in and not by the outstanding balance on your mortgage statement.
The number one priority when selling your home is to get the most money you can for it. Enlisting a Realtor who can provide you with the data you need to make informed decisions is critical. Pricing a home is more than a number, it's a strategy to ensure none of your hard-earned money is forfeited at the closing table.
Pull comparable sales
The first step in establishing a price for your home is to look at the 'comps' - or comparable homes in your area. A Realtor will perform this process for you by completing a Comparative Market Analysis or CMA. The objective is to find properties that mirror your home, comparing apples to apples whenever possible. Criteria such as floorplans, year built, square footage, lot size, bedrooms, bathrooms and upgrades will all be taken into consideration. The closer these properties are to your home, the more weight they bear. Considerations such as traffic patterns, proximity to parks or other neighborhood amenities will also be indicated and assessed a value in the overall picture.
When performing a CMA we will look at properties that have sold in the last 3-6 months to paint the most accurate picture. We will also look at current properties active on the market - how long have they been on? Have they had any price adjustments? We will look at pending listings, those that have accepted a purchase agreement and are moving toward closing. How many days were they on the market before accepting an offer?
Establish a price range
As we narrow our list of comparable properties down to those that most closely resemble our own, we will be able to establish a range with which most of these properties fall. However, we know that not all 4 bedroom/3 bathroom bungalows are created equal. By studying each of our comparables at length, taking note of condition, craftsmanship, aesthetic, layout and other variables undefined by simple metrics, we will be able to gauge a more accurate picture of how your home measures up. Once we have established the range that homes just like yours are selling for, it's time to talk strategy.
Determine a pricing strategy
While crunching the numbers and studying the comparables are fundamental to establishing a price for your home, we also need to examine the market conditions as they relate to your home today. We need to take into consideration the number of days comparable homes took to sell and the percent of their asking price they sold for. When you are priced accurately, you capitalize on the swarm of buyers that invade a new listing on the market. The buzz it generates brings healthy competition amongst buyers - potentially multiple offers driving your sales price up.
Often sellers feel they have 'time' and want to try their home at a higher price than the evidence dictates. Keep in mind that buyers are savvy - many of them have been shopping properties for weeks, months or even more. Be careful not to forfeit your 'new listing' status when the hum of eager buyers can be heard. Leverage your asking price to attract them rather than turn them away.
What's at stake
Why does it have to be so complicated? Why can't we just ask for what we want...or need? While you might be able to snag a buyer at a price higher than the market dictates, the deal can fall apart in a hurry when a buyer's financing is involved. A lender will require that an appraisal is performed on the property. If the appraisal comes back with a value lower than the agreed upon price, buyers will approach the seller for a reduction in purchase price or worse, cancel the purchase agreement. Where are appraisers gathering their information to determine the value of your home? With the same comparable data we used to determine our asking price. This is why carefully choosing comparable homes and weighting them accordingly is critical to seeing your transaction through to closing.
Knowing what your home is worth is one part art, one part science. Enlisting the help of a professional to pull comparable data for you and study market trends is the first step in valuing your home. Landing a buyer willing to perform on your terms is a mixed medium of pricing strategy and marketing. If you are wondering what your home is worth, it is absolutely free for me to perform a Comparative Market Analysis on your home. A CMA is a great tool to have not only if you are thinking of selling, but also considering upgrades on your home. Contact me by email at sarah@foxhomes.com or by phone at (612) 723-7636 to schedule an appointment today!