How Real Estate Agents Determine The Value Of Your Home
All real estate agents should be bringing a Comparative Market Analysis of your home when they come to meet with you to list your home. Real Estate Agents use a similar system to what the banks will be using to determine your value these are the main characteristics in importance order that you will want to be using.
- Homes within 1-2 miles of your home that recently sold within the past 90-120 days.
- Homes of the same style (EX: Ranch, Hi Ranch, Cape, Expanded Cape) or similar square footage if there is a lack of comparable style homes. You can not compare your home to one of an opposite style just because you think your home is just as good, the bank won't allow it.
- Rarely will you see homes with the exact same amount of bedrooms, baths, or even property size this is where you need to adjust the comps accordingly.
- Take a look at what homes are currently on the market, and compare how your home stacks up to theirs, these homes are your competition.
The 3 Styles Of Pricing Your Home
- Overpriced Home - This type of pricing is not only a waste of your agents time but yours as well. You are putting yourself behind and unnecessary roadblock, and guaranteeing you will be having the dreaded price adjustment talk sooner than later. Many homeowners will say "But I am flexible, just bring me an offer!" - There is only one problem with that, and it is that we can not relay that to all of those buyers who aren't a- looking at homes $20,000 above their budget or b- tell those buyers who are in that range that you are flexible. Remember most buyers find their home online, so presentation including price is a very important factor and we can not write on your listings that you are willing to hear all offers !
- Market Priced Home - This is an educated homeowner who has taken the time, and hopefully the advice of their real estate agent and is priced in the same area of those comparable of the recently sold homes. This kind of pricing will get you showings, and hopefully an offer within 6 months of being listed. As other homes sell their might be a need to adjust the price of your home to stay in line with what homes went from contract to sold once you were listed.
- Action Priced Home - Before I explain, let me say this action price does NOT mean pricing the home as if you were giving it away. When you use this style of pricing you first base it on the comparable homes in the area that sold, but your focus is shifted to those homes that are currently on the market (those that are priced at market value, not of those that are overpriced). You look at your direct competition and price it anywhere from $8000 - $10,000 below that of your best competition. Normally on a market priced home once you have received an offer that $8000 - $10,000 is the wiggle room of where you would accept an offer. What you do by pricing it that bit lower is your drive much more traffic and increase your chance of multiple offers, almost every home that is "action priced" will sell for either the listed price of the home, or possibly more because you have increased the buyers perception of value !
There are a few things you will also want to keep in mind when you are thinking about where you want to price your home. The most important questions you should be thinking of when determining the list price of your home are
- How much will you need to be able to get away from your home ?
- How quickly do you need or want to move ?
- How many times has your home been listed ?
If you are interested in having a Comparative Market Analysis done on your home, please contact me directly. I will be writing another blog that goes into the specifics between things that will add value to your home verse things that are more features of your home, which can affect the overall listing price of your home in an upcoming blog !