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The Market Value Of Your Home
rofessional appraisers sum loan, the appraiser will only
it up in three words -- consider recent closed sales.
buyers make value. Asking prices will not be
Ultimately, the value of your considered. A sales price that is
home is what a reasonable buyer solidly based on recent sales of
is willing to pay within a similar homes will not have a
reasonable time. Setting an problem when the price is later
asking price for your home reviewed by an appraiser. If your
requires that you anticipate what home is superior or inferior to
most buyers would be willing to most homes in the neighborhood,
pay. This requires a close look or if there are few or no nearby
at comparable home sales in your sales, then anticipating the
area, as well as making an responses of potential buyers
assessment of the state of the will be more difficult. In this
real estate market itself. case, a trial and error strategy
Pricing correctly is fundamental may be necessary. This is a
to the successful outcome in the sensitive area and requires a
sale of your home. realistic assessment of your home
and its market. For example, one
Market Analysis very nice home was continually
rejected because it had the
Homes listed for sale and recent master bedroom upstairs, and it
closed sales in your area will was located in an area where most
usually provide relevant buyers were over the age of 45,
comparable data for pricing your with older children.
home. Closed sales show "market
confirmed" prices, while listing Real Estate Market
prices indicate the current trend
in pricing. Later, when your home An important aspect of pricing is
is appraised for the buyer's an assessment of the state of the
real estate market. The market inventory is considered a
may favor buyers or sellers, or seller's market. In a seller's
be in balance. An indicator of market the number of buyers is
the quality of the market is the large in proportion to the number
number of months of standing of homes for sale. The demand for
inventory in your market and homes is greater than the supply.
price range. Consider your market Buyers must compete with each
area to be all neighborhoods that other for the available
offer competing choices for your inventory. There may be multiple
potential buyer. Here is how to offers received shortly after a
do that: property goes on the market.
Buyers will submit the highest
Count the number of sales in your possible price and terms that the
market area and price range for market will support. Prices will
the past 12 months. trend upward. In a climbing
Divide the number of sales by 12, market, pricing slightly above
to get the number of sales per recent sales is appropriate.
month (sales rate).
Count the number of homes on the Buyer's Market
market now.
Divide the number of homes on the More than 8 months of inventory
market by the number of sales per is considered a buyer's market.
month (sales rate). In a buyer's market the number of
This will show you the number of buyers is small in proportion to
months it will take to clear the the number of homes for sale.
current inventory. This situation can be created by
high interest rates, employment
Seller's Market decline and excessive building. A
low number of buyers equals a
Less than 6 months of standing lower price. Sellers must compete
with each other for available equal. We usually graph the
buyers. Prices trend downward. In neighborhood prices per sq. ft.
a falling market, prices should to get a visual picture of the
be set at the lower end of the market in the neighborhood, as
range, because time works against well to see how much the price
you. In six months prices may be per square foot declines from
lower. This may be difficult to smaller to mid-sized to larger
do, especially if your home was homes.
purchased at a higher price.
Should you price "high," and hope
Price Per Square Foot for an offer?
"Dollars per square foot" is Houses should not be priced over
often used as tool for comparing the market. This is not the best
homes of varying sizes to way to position your home for
determine a list price. When several reasons:
price per square foot is used, it
is important to keep in mind that Your home will be shown to the
you must make a sliding scale wrong group of buyers, from whom
adjustment from larger to smaller you need an aggressive negotiator
homes. In other words, the larger - someone who will make a low
the house, the lower the price offer.
per square foot for comparable
homes. This is because the core You will inadvertently help to
square footage of a home has a sell the competition. Your high
higher value than the peripheral price will convince buyers that
area. For example, the price per another home is a good value.
sq. ft. on a 1,000 sf home will
be much higher than a 5,000 sf Your "days on the market" is
home, with other things being evident to buyers, and is a
subtle but important factor in indicates that are buyers, but
their decisions. Your best they have other choices with more
leverage occurs during the early competitive prices. Or, you may
marketing period. have very few showings. In this
case, the buyer pool for your
How will you know if the price is area, or for the style or
correct? condition of your home is small.
This will require a strategy of
The best affirmation of correct more competitive pricing and a
pricing is second looks from longer marketing time. Remember
buyers. This indicates that your that a small buyer pool, for any
home appeals to buyers in your reason, is a "buyer's market" and
price range. There may be a few requires more aggressive pricing.
"nibbles" before a buyer comes
forward who is ready to act. It
helps to get feedback from How long should you market a home
Realtors and potential buyers. at a given price?
Keep in mind that they will often
be reluctant to say "negative" There is no uniform time frame
things. The summary of feedback for marketing at set price. I
is more important than what they think about 8-10 showings is a
say. Are you getting "nice" reasonable number for feedback
rejections or are you getting regarding the price. This usually
second looks? corresponds to about 2 - 6 weeks
for an average home in a balanced
How will you know if the price is market. About 30 days marketing
incorrect? time for a given price could be
good a rule of thumb. However,
You may have steady showings, but this may be too short for your
lukewarm responses. This home if you have an unusual or
very high end home for which consider a schedule for dropping
there is a small market. Or, 30 your price until it reaches a
days may be too long for your level that attracts buyers.
home if you need to move fast. There's no reason to say, "We
simply can't sell our house."
What happens if your home does Houses will sell if the price is
not sell in a reasonable time? right.
If your home has been on the How can you get top dollar for
market for months with no offers, your home?
you have been given a clear
message that the price is set too Although buyers will not pay more
high. This is particularly true than market value, they will pay
if showings have slowed down and a premium for homes that are in
there are few prospects coming to excellent condition and well
see it. What you do at this point presented. With good condition
depends on whether you really and presentation, you can reach
need to sell. If you're not the high end of the price range
really motivated to move soon, achievable for your house. We
you can always wait for the will work with you to "create
market to catch up to the price value" before your house goes on
you want. It would be best to the market. When it goes on the
take your home off the market and market, we will make sure that
wait for better conditions. your home is show beautifully to
Buyers become suspicious of a a wide audience.
house that's been for sale for a
long time. If you need to sell,
About the Author:
Roselind Hejl, CRS, is a Realtor with Coldwell Banker United in Austin, Texas. Her website: http://www.weloveaustin.com offers relocation information, homes for sale, search MLS, buyer and seller guides. "Let Roselind help you make your move to Austin." Top 25 Residential Agents - Austin Business Journal
Source: www.isnare.com
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