Determining Your Home's Value

Proper pricing is dependent on several factors, the most important being recent comparable sales in the neighborhood, what is currently on the market in competition with your home, and the condition of your home. These factors can change rapidly within months, so a current market analysis (CMA) on your home is crucial to pricing your home correctly. Price it too low, you lose some of your equity, price it too high you lose potential buyers.

The most common mistake is over-pricing. Overpricing your home means it sits on the market longer, and one of the first questions a buyer usually asks is how long a property has been on the market. The longer your home has been for sale, the more the buyers are inclined to believe something is wrong with it, and the lower the offer will be.

Price it right and it will be shown, and if the buyer really likes it, he will pay what is asked. Informed buyers will demand a market analysis from their REALTOR®, and they will be able to see that you have already priced your home to market conditions.

What Does NOT Affect a Home's Value

1. What you paid for the home.
2. What you put into your home in remodeling or decorating. These are features which really only enhance a home's desirability and make it sell faster.
3. The amount of cash you need to buy your new home.
4. What you say your home is worth.
5. What I say your home is worth.
6. What another agent says your home is worth.
7. What an appraiser says your home is worth.

What DOES Affect a Home's Value

1. Location of the home.
   
2. Major improvements on the home (pools, covered patios, etc)
3. Recent comparable sales within the last six months
4. Current competition on the market
5. What a sophisticated buyer is willing to pay based on his comparison of your home with others currently on the market. Agents and sellers set list prices, but buyers determine value!

A Comparative Market Analysis (CMA) is a record of what the buying public has been willing to pay in the past few months for a similar home in your neighborhood. A CMA differs from a formal appraisal. An appraisal is a report which is based only on past sales in the last six months. It is usually prepared on behalf of a mortgage lender who is loaning money on the property to a buyer. A CMA is a more comprehensive report which includes additional data on homes which are currently on the market, those that are pending sale (under contract), and those which failed to sell within the last six months. Unless you have a truly unique property or there is a difference of opinion on value among co-owners, a market analysis is  usually enough to set a proper listing price. (Never say asking price - this implies that you will accept less than the listed price).

Setting the Price
The price is the first thing buyers notice about your property. If you set your price too high, then the chance of alienating buyers is higher. You want your house to be taken seriously, and the asking price reflects how serious you are about selling your home.

Several factors will contribute to your final decision. First, you should compare your house to others that are in the market. I will provide you with a CMA. The CMA will reflect the following:

• Houses in your price range and area sold within the last half-year
• Asking and selling prices of houses
• Current inventory of houses on the market
• Features of each house on the market