Selling your home is a big decision. You’ll have much to do, like making repairs before listing your property. Additionally, you’ll have to declutter, depersonalize, and disinfect every room. All of this, not to mention the fact you’ll need to house hunt, organize your stuff, and plan a move. The list seems endless but once you begin to get a handle on it, you hit a real stride. One very important factor in selling your home is pricing it right. You’ve got to know your home’s true market value.
How to Find Your Home’s True Market Value
Home sellers can easily sabotage their own efforts. Undermining a sale is usually due to the wrong price. Sure, you want to sell your home for top dollar but that doesn’t mean you have free rein. One example is the home seller who sets the asking price a bit higher than market value. The rationale being doing so provides room to negotiate. It’s believed a buyer will pay a little extra or the final sales price will come-in at true market value.
“The fair market value of your home is used by lenders to work out a refinance or home equity loan, by the tax assessor to calculate your municipal property taxes and by insurers to set homeowners insurance premiums. The fair market value is the price your home would sell for if you placed it on the open market for a reasonable amount of time, and both parties–you and potential buyers–acted on your best interests. Knowing what a property would sell for in an ideal market is not a straightforward calculation.” —San Francisco Gate
However, when this tactic is used, it typically backfires. Buyers who search online won’t see the home in the listing because it’s outside the price range. And, real estate professionals will probably avoid the listing because they know it’s priced too high. Even if an offer comes, it’s likely to be lowball. This strategy just isn’t worth it. So, that means when you decide to sell, you need to know how to find your home’s true market value:
- Find comparable homes. Comparable homes are houses which sold in the past few months. These residences should have about the same livable square footage, same number of bedrooms, same number of baths, and same size garage. Also, those comparables ought to have similar amenities and features — like a swimming pool or a great outdoor living space.
- Exclude distressed properties. Identify any distress properties that are included in recently sold comparables. Distressed properties are foreclosures and short sales. Even though these might be very similar to your house, the fact they’re distressed means the selling prices aren’t reliable measurements of the market. In the alternative, you’ll have to make adjustments but this is quite tricky because of the unknowns and assumptions.
- Throw out any needing renovation. Along with any foreclosures and short sales, you should likewise ditch any comparable properties that need significant work. For instance, a house that needs a new roof or a new central heating and air system. Or, homes which are in a state of disrepair and require substantial updates. Those too, aren’t good measurements on which to base your listing price.
- Drop any current listed properties. After you’ve excluded foreclosures, short sales, and fixer-uppers, it’s time to drop any current listings. Although these homes possess the same livable square footage, bedrooms, bathrooms, and garage, they’ve not yet sold. And because those listings have not sold, there’s no definitive data to support the asking prices.
- Set a listing price at parity with the market. Now, you’re left with a list of truly comparable properties. These are the homes which have sold recently, are in the same or similar neighborhood, and possess other similarities. So, you can average the selling prices to know your home’s true market value.
If you’re going to sell your home in the near future and buy a new house, please don’t hesitate to phone me at 407-616-7286, I’ll be happy to speak with you.