I recently received an email from Mark a former client. He’s considering selling his home and, like many home sellers do, he went online to see if he could figure out how much the home is worth.
“Zillow values my home at $325,000,” he writes. “Yet, one of my neighbors recently sold his home, which is almost identical to mine, for $365,000.”
He went on to say that he is quite confused about the home-pricing process and wondered if I could help him out.
First, the online real estate portals offer only “estimates” of a home’s value. They have never seen your home or any other home for which they determine an estimate, so they are rarely correct.
It’s all about market value
One thing Mark got right is that he understands that the price he sets for the home should reflect its current market value.
The only way to know what that is – what a willing buyer will pay to a willing seller for a home like his – is by figuring out what they’ve paid for similar homes in the recent past.
This means we need to look at sales prices of similar homes. And, there’s more that goes into determining if a home is comparable to yours than meets the eye. When determining a sale price, I look at the same criteria that professional appraisers do.
- The age of the home:
Sold homes that are within three years (either side) of the age of your home.
- The size of the home:
Yes, I look at the sold homes’ square footage, but the number of bedrooms and bathrooms also plays a role in determining market value.
- The home’s location:
I try to find sold homes in close proximity to the subject property, but will consider a wider range, if necessary. The location within your particular neighborhood may also impact its market value.
- Upgrades, amenities and condition: I compare your home to the sold homes with an eye toward any upgrades performed, whether similar amenities are offered and, most important, how the condition of the homes compare.
Next, I’ll do the number crunching to determine if your home is worth more or less than the sold homes.
What Will The Appraiser Say? He or she, after all, has the final say in how much your home is worth in today’s market. No lender is going to approve a loan for more than a property is worth.
This is why I am so thorough in my determination of the appropriate price for your home. An inaccurate evaluation on your agent’s part can lead to a failed real estate transaction, just when you thought it was a done deal.
The appraiser will visit your home to perform an inspection. He or she may or may not take photos while in the home. The appraiser will certainly consider the home’s landscaping, “location, structure and even appliances,” according to the pros at LexurAppraisal.com.
The inspection process can take “anywhere from 20 minutes to 3 hours depending on the size and details of the property,” according to Rachel Guthrie at GoHomeside.com.
If you hire an experienced listing agent, the suggested list price should match or come very close to the appraised value of the home. This is why it is so important to interview more than one agent for the job of selling your home.