WHAT IS YOUR HOME WORTH?
I was a licensed appraiser for 14 years and I’ve been an active real estate broker (sales) for over 17+ years and there is one thing I can tell you for sure.
Nobody really knows truly what your home is worth UNTIL it is listed.
Once you list a property for sale (and it’s marketed properly letting all potential buyers know it is for sale). You will usually figure out right away whether you have priced your home at the right amount. Typically you should start getting inquiries and showings on your home right off the bat, and this should remain somewhat consistent all the way to the point that you get an offer. How long this takes depends on the season when you are listing it for sale and whether it is currently a buyers or sellers market. If there’s lots of homes similar to yours in the area available for sale, then it may take a considerably longer time to sell. If you are the only one listing in your price range -then it should go much faster.
If you put your home on the market and nothing happens (not a single showing for over 10 days) or you get one showing then nothing after that, -this is the first sign that you are going to need to do something to improve the perceived value of your home in the market. This means one of two things, either you do some improvements to the home increasing its desirability, or you lower the price.
The home with the best perceived value will always sell first, -so if your home is an exact model to another home in the same neighborhood, but you’re priced higher. You will likely have to wait till that seller goes under contract before you start seeing offers on your place.
There are several things we do to make sure your home is priced right.
First off, it’s important to consider both what has sold in the last 6 to 12 months, but also what is currently available for sale (your competition). If you were to go on the market right away, -what other homes will buyers be comparing your home to? Also we have pay attention to average days on market -how long is it taking homes to typically sell? If homes have been listed on the market longer than the average there’s a good chance it’s overpriced and/or has other issues that may need to be addressed. Other important factors in order of importance would be Location, Size or Price per SF, Age, Condition, Lot Size and other Amenities or Features.
Location: Which town is it located in? Which school district? On a busy street or backs to a wooded area or park? Neighborhood? Nearby needs or attractions -walking distance to downtown area, or near train?
Size: Price per SF is typically always based on finished above grade parts of the home. The basement is always treated separately -even in appraisals. Is there a basement? Is it a full or partial basement? Finished or Unfinished? Walk out, English or Below Grade Window Wells? Beware, while most agent post the “Assessed Square Footage” meaning above grade, sometimes agents will include “Total Living Area” instead -meaning they are also adding the basement space to total SF.
Age: When was it built, Was it recently partially or totally remodeled, were additions added at a later date?
Condition: How old is Roof, Windows, Hvac system, Appliances etc. What kind of wear can be noticed on floors, walls, doors etc. Outside decking, patio, or other improvements?
Lot Size: While this is typically a less important feature when comparing everything else, it has become more important post covid. Comparing the size to the average helps. Larger lots are a little nicer versus much smaller -depending on what a particular buyer is looking for. Larger may be great if you have a dog but not great if you’re looking to retire and put the yard work behind you.
Other Amenities/Features: Is there crown molding, skylights, granite or other upgraded counters in kitchen and bathrooms, fireplaces or other special features? Pools aren’t always a positive for buyers in the midwest, in fact I would bet over half my buyers ask me how much it is to fill in or remove a pool, especially if they have small children.
As a full time practicing Real Estate Broker I find it very helpful when listing homes for sale to always be looking at homes with buyers as well. Its important to not only understand what they are looking for, but also what is typically and currently available for sale in each specific neighborhood.
The best way to figure out the value of a home is to have physically been in similarly priced homes in the same neighborhood within the recent past. In this respect I think it’s easier to value a home as an active Real Estate Broker -having been in many of the homes, versus an appraiser who is really basing everything solely on pictures and a description. Have you ever seen a home online that looked perfect and then went to see it in person only to find out it was nothing like you had imagined?
The biggest mistake sellers make is either thinking their home is worth more than it is, or listing it too high to start with to “test the market”.
Sellers can often have difficulty being truly objective on the value of their own homes. Everyday I see homes get listed online for a price that is simply too high. They likely didn’t listen to their agent or their agent didn’t know what they were doing. It’s not unusual for an agent to get a listing -list it for higher than they should have (either because they felt pressure from the seller and just wanted the listing or because they somehow mis-read the market. If this happens it’s important to make a price adjustment as soon as possible.
Here are some scenarios I come across often. The seller lists too high, becomes unhappy with their agent because it’s not selling, they fire the agent, then call me and I show them a more objective price on their home (along with any needed improvements to home or marketing), then it sells.
Or
Seller decides they want to start with a higher price and think that if a buyer is interested they will make an offer -even if the buyer thinks it’s too high. This simply doesn’t happen. I work with buyers all the time, when we walk into an overpriced home the buyers will, more often than not, hold off on putting an offer in -even if they love it, because they would rather see if the seller eventually gets more realistic and lowers the price or wait until another similarly priced and perhaps better valued home hits the market. Usually what happens in this situation is a better priced/valued home comes on the market and they put the offer on that home instead meaning Mr Seller just lost a real buyer and their days on market continue to climb.
What about Zestimates and other A/I (artificial intelligence) type online valuations?
While there are some real issues with these sorts of valuations (look up “Zillow cancels its Zillow Ibuyer/offer program”), they aren’t completely useless. The value ranges of these often have about a $100K to $150K swing. Meaning the average value they are guessing your home to be worth could be off by as much as the same. Really the only use for an A/I type valuation is to watch which way the value goes over time. In this way you may be able to tell when values in your are at least improving or declining.
I do a lot of analysis before meeting my clients for a market analysis / valuation and try to point out the differences in the market in real time so that my sellers can make the best decisions based on their motivation, timing and needs. If you would like a free, no obligation market valuation done on your home, please reach out.