If you’re planning on selling your home, you need to know how to price it correctly for the market.
Of course, you can use an automated valuation program like Zillow or on an agent’s website. Those work by pulling the data from the homes that have sold in the area. These automated valuations are hit and miss, however. It can be a good place to start.
If you’re planning on selling now, how do you know where your home sits in terms of value? First, let’s talk about the importance of pricing your home.
Pricing is the No. 1 most important thing when it comes to selling your house. There are a few misconceptions that people have when it comes to that.
When it comes to selling, your home is NOT worth:
- What you paid for it
- What your neighbor says
- What you need
- What Zillow says
- What you want
- What it costs to rebuild today
The price of your home is actually what a buyer is willing to pay for it right now in this market.
More people come to view your home within the first three weeks of having it on the market. Those buyers who come in the first three weeks are looking with an agent, and ready to buy so you want your house to be priced correctly. After that, you’re riding the market down. Fewer people will come in after those three weeks if you’re not pricing it correctly. If you price it to high, they’ll move on to another house completely or wait for your price to come down.
Keep in mind, you can’t price it too low, either. You’ll receive multiple offers that will push the price above your list value.
When it comes to finding the correct price, there are actually two values that I look at: appraised value and market value.
The appraised value is what you see on your computer or on paper. How many bedrooms do you have? What’s your square footage? How many bathrooms do you have? What year was it built? The answers to these questions will determine an appraiser’s valuation.
The market value is determined by the state of the current market. Even if the appraiser values your home at $500,000, if the market isn’t there, it might not actually sell for that much.
This is why you need to be talking to a real estate professional early on in the process, to make sure that the appraised value and the market value match up.
When you’re trying to figure out what the value of your home is, look first at:
- Location. Are you near a school district? Compare your house only to those that are in your immediate area.
- Square footage. Is it the same as a house down the street? There are some tricks that people will use to increase the square footage, so you need to be aware of what the assessor says your square footage is. Remember that the assessment of your square footage is only going to include your first and second floors, not your basement.
- Condition. Make sure that the condition of your home matches the homes in your area. By ‘condition’, I mean something that’s been redone with the last five years.
- Comparables. You can only go off of what has sold in your area and not off of the active homes currently for sale. This is not a good comparable because you haven’t seen that a buyer is willing to pay that list price.
If you’re like to verify where your home is at in terms of value, feel free to reach out to me. I’d love to help you out.