Determining Fair Market Value
Now that you have decided to sell your home, it is time to determine the list price. It is essential to list your home at the right price and it is important to get it right the first time. The pricing of a house is a major component in ensuring that your home sells quickly.
There are several ways to determine the market value of your home, including an Automated Valuation Model, Comparable Market Analysis and Appraisal. An Automated Valuation Model is an electronic appraiser that provides a Homes Sales Valuation Report by entering your property address. A Comparable Market Analysis is generated by comparing prices of similar properties in your area that have recently sold, are currently on-the-market or were taken off the market unsold. Unlike a Comparable Market Analysis, which is what I will do for you, an Appraisal is completed by a professional appraiser specifically for your home and costs between $200 and $300. After inspection, the appraiser will determine the value of your home based on its condition, location and a Comparable Market Analysis of sold properties in your area. Together, we will agree upon the price that is right for your house.
Tips for Setting the Price
1. Abandon your Personal Bias
In order to determine the market value of your home, you must objectively establish what someone else would pay for your house. This means setting aside your emotional attachment to the many wonderful memories you have shared in your home. Some things to consider when determining the price of your home: total square footage, floor plan, construction quality, condition, amenities, lot size, topography, view, landscaping and neighborhood.
2. Educate Yourself
Visit local open houses and compare the location, condition, size and amenities of these houses to your own as objectively as possible. If your house is located in a neighborhood that is highly in demand, you will be able to get a higher price than you can for the same house in a less desirable area. A house that has been well-maintained will show better and, therefore, is likely to sell more promptly and for a higher price than one that needs work. When a house offers amenities that are currently popular in the marketplace, it will invite a higher price.
3. Get Comparable Market Analysis from your Real Estate Agent
As your real estate agent, I will give you a full Comparable Market Analysis after examining what comparable homes have sold for in your neighborhood in the recent past. Drawing upon my knowledge of other homes within the area, I will determine what I believe to be an approximate value of your home that we may use together to determine the final listing price.
4. Calculate the Price per Square Foot
Using homes from the Comparable Market Analysis, divide the list price by the total square footage. This will establish a baseline value per square foot of homes in your area. Multiply this number by the total square footage of your house and adjust based on amenities.
5. Consider Market Conditions
How is the economy? Interest rates? Local job market? What season is it? Homes tend to sell more quickly in the Spring and Summer months than in the Winter because people prefer to move during the longer warmer days and between school years. Are prices of homes in your neighborhood on the rise? Are they selling quickly? Check your Comparative Market Analysis to determine the days on the market for each comparable house sold. When real estate is booming, houses may sell in a few days. Ask your local real estate agent if it is a buyer’s or seller’s market. The Unsold Inventory Index, which indicates the pace of the market, is calculated by measuring how long it would take for all the homes currently on the market to be sold at the current rate of sales. A smaller index signifies a seller’s market, whereas a higher index suggests a buyer’s market. The Price Discount is the percentage difference between the seller’s initial asking price and what the house actually sold for. A small percentage means the market favors sellers, while a large average discount signals a buyer’s market.
6. Offer Incentives
Be creative and flexible in meeting the buyer’s needs. For example, offering a short escrow will attract buyers who want to move immediately. You might propose paying the buyer’s closing costs to seal the deal. Cash incentives will help first-time buyers who need assistance with their down payment.
NYS Licensed Associate Broker