One of the first questions I will always get when someone is thinking about selling their home is "So what is my house worth?" There's good reason for that to be the first question asked when deciding if the time is right to sell. Your home's value will play a role in how much you can afford in a new home. It can mean the difference between turning a profit or being underwater on your mortgage. When you are selling something worth hundreds of thousands of dollars, finding the right price is important. A price that's too high could mean your home doesn't sell. Price it to low and you could lose thousands of dollars. Unfortunately, finding the your true home's value isn't as easy as finding the price of a book. Turn most books over and the price is stamped right on the back cover, but a home's value is constantly changing and determining the right price isn't a simple task.
Things To Understand Before Setting a Price
1 - Appraised Value and Market Value are not the same thing. It is common to think that once an appraiser comes out, inspects your home, and gives you an appraisal that you now have your exact home value. That would be great, but unfortunately that's not the case.
An appraised value is simply the value of a parcel of real property in the opinion of a single qualified appraiser. In fact, if you have two or more appraisals, you'll probably get two or more different values because in the end it is an opinion. A very educated and qualified opinion, but still an opinion. Currently, due to the very hot market we are in, appraisals are sometimes running behind the true market value. The appraiser will use sold homes for comparison and not pending homes. Typically it can take 30 days for a home to go from pending to sold. That means an appraiser's comparable home(s) can be 30 days old. That's not much typically, but as prices continue to rise it could be thousands of dollars below what your home will sell for today.
Market value on the other hand is simply what someone is willing to pay for your home. The old law of supply and demand is the greatest influencer of this price. So when it comes to selling your home, market value is what you will try to determine and it won't be ultimately determined until your home is sold.
2 - Your opinion doesn't matter - Ok that sounds harsh so let me explain. Just because you love the wallpaper and think it's so much better than Betty's home that just sold doesn't mean the buyers will agree. The fact that your kids grew up playing on the tire swing in the back and sliding down the stairs and all the other wonderful memories you have are great but buyers won't pay for your memories. They don't have the emotional attachment to the home that you do. It is always easy to think our home is better than all the others because we've decorated with our taste and made great memories etc.
So How Do You Set A Price?
1 - Look at the current market. All home values will start with a look at the current market. What have other similar homes in your neighborhood sold for? What homes in your neighborhood are currently for sell and how does your home compare? How many homes are for sale? Is the market flooded or are homes scarce? (Hint - They are scarce right now which makes it a great time to sell.) You can get a quick peek at the value of your home as compared to the current market using my free home value estimator below.
2 - What Makes Your Home Special? After looking at comparable homes, it is time to look at your home and see if anything makes it stand out. Do you have a pool? Is your home the only one in the neighborhood with upgraded kitchen and bathrooms? Do you have solar panels? (Leased solar panels won't add value and can often lower the value because the buyer will have to assume that lease) Does your home have an addition? Is it in walking distance of a great school? The list can go on and on.
Measuring all of the unique features of your home and coming up with the right home value isn't easy and really requires a pro. But don't take my word for it, here's what Dave Ramsey has to say on his blog.
If all signs point to go, you’re ready to hone in on the perfect price for your home. As we mentioned, you’ll find all sorts of values for your home floating around the Internet. But the real deal? That comes from a pro.
Here’s why: A real estate agent doesn’t pull stale information from the shelf.They use the power of human intelligence to compare your home’s nitty-gritty details with recent sales and current listings. Let’s say you installed a new roof last year, but your kitchen’s straight from the ’70s. An experienced agent knows how to weigh those factors against the rest of the market to determine a competitive price for your home.
No computer can do that. Yet your success as a seller rides on it.
As you can see, "What is my home worth?" is a loaded question that doesn't have an easy answer. But that is where I come in. As a trusted REALTOR® with Berkshire Hathaway Home Services, I can help. If you are thinking about selling your home, we need to meet so I can see your home and talk to you about what makes it unique. Then I'll look at the market and comparable homes and your competition and weigh it all to determine what your home should sell for. To be honest though, the price I tell you still won't be the true price of your home. That is only determined once it sells because your home is worth what someone will pay for it.
So if you are thinking about selling your home call me or email me. I'm happy to provide you with a FREE comparative market analysis.
Finally, download my FREE Home Seller's Guide. It's an extensive guide to the home selling process and it's free!
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