When preparing to put their home on the market, every homeowner has one key question on their mind- “What is my home worth?”
It’s important to understanding the basics of what goes into pricing your home. This will help you get the most for your home in the least amount of time. Ultimately, your home is worth what a buyer is willing to pay for it and what you are willing to sell it for. This is the reason why the most common method for determining the value of your home is using comparable sales.
I use the most recent sales of comparable homes in your area to determine the appropriate pricing strategy to list your home. Let’s break that down to better understand:
- Most Recent Sales: Depending on how many homes are selling in your area, I try to find homes that sold within the last 90 days. If there are not enough that are similar to your home, I will bump my search out to 120 days. Then I will go to 180 days, 360 days, etc. The most accurate will be the most recent. Finding 3 similar homes that sold in the neighborhood within the last 7 days is the best route to take in this case. This method will be a great indicator/predictor of what your home will sell for.
- Currently For Sale: The homes that are similar to yours and currently for sale are your competition. If you are over-priced, you will sit on the market as the other homes are purchased up. A good strategy is knowing what homes are selling for (see point 1). Pricing competitively against the homes currently on the market is important.
- Truly Comparable: Take a look at the recent sales and currently-on-the-market properties. Make sure you are realistically and objectively comparing your home to the others. Often we think our home is worth more because we VALUE the memories and design choices. Be honest in evaluating your home against others. Do you need a paint job? Is the bathroom outdated? How about the kitchen? What does your curb appeal look like compared to the others? Based on these answers you might need to be at the TOP of the price range. Alternatively, you may need to adjust your price down to compensate for any inadequacies.
What Your Home Value is NOT
It can be difficult to be objective (and that is where a professional can help), but you have to set aside your tastes and feelings. Here are a few things that the value of your home is NOT based on:
- What You Paid for Your Home: It can be difficult and painful to accept this, but it does not matter what you paid for it. That goes both ways. If you bought your home for $349,900.00 and it all of the data suggests a list price of $299,900.00, then you are out of luck. The numbers don’t lie. The same is true in the opposite direction. For example, if you paid $299,900.00 and the data suggests $349,900 then you are going to make some money. So it doesn’t matter what your monthly payments are or anything else. Also, don’t let buyers negotiate you out of money by looking at what you paid for it!
- What You Think of Your Home: Many of us love our homes and can’t understand why someone else wouldn’t feel the same. Often we build memories and we can’t help but be influenced by our emotions when thinking about our homes. You might love purple walls, but buyers will knock big bucks off their offer price to compensate for a professional painter.
- What You Spent on Your Home: The THOUSANDS you’ve spent on repairs, window treatments or landscaping won’t influence the price in the minds of buyers. One debatable update is when people finish their basements. Sometimes we spend a lot of money down there and enjoy the finished space for years. One might think that should be worth SOMETHING. Right? Well, I have found that two identical homes, one with a finished basement and the other without, may sell for the same amount in the end. However, the home with the finished basement might sell a lot quicker!