We all know this real estate market has gone through the roof as far as values go. But everyday I see sellers lose potentially tens of thousands of dollars by not following a few simple steps.
Pricing Your Home Correctly in Today’s Market
Dated: June 7 2021
How much is your home worth? This is a hard question to answer without taking several things into consideration. There are many tools out there to help you, but are they any good? The point of this article is to inform you on the ways to determine an accurate pricing for your home.
While this used to be a good standard, in today’s market, you cannot rely on an appraisal for accurate valuation in an up market. Comparable sales methods of determining sales price are outdated very quickly in a fast-paced market. They are using “sales” or “solds”. A lot of times these comps are outdated because they went under contract a few months earlier. In a fast moving up market this data is lagging.
2. Automated pricing engines.
Things like “Zestimate” are what we are talking about. These are not bad if you live in a cookie cutter neighborhood. But when you start getting into rural areas and mixed neighborhoods, i.e site-built homes and manufactured like we have, their automation tools are using lacking quite a bit.
3. County assessment / real market value.
In our area, County assessment has virtually nothing to do with the actual value of the home. Make sure that you are NOT selling your home based on this value. You will be significantly underpriced.
4. CMA (comparative market analysis).
Closer to a real value, the CMA is a mini appraisal. Again, in an up market (or down market), the data is lagging and reflects what things sold for a few months ago.
5. My Neighbor’s House…
A lot of times sellers will think that the ask price of neighbors’ home is the place to set your price. Remember there is a lot of adjustments that can be made and unless you have the same house and same lot, it will fluctuate.
6. Dollars Per Square Foot
This one is harder to explain so I have a article dedicated to this topic. Check out “Dollars Per Square Foot” article to see why this is a terrible way to determine value.
So how do you price it right? It depends on the market, but in a hot sellers’ market I use a combination of the above to determine value. But there is one secret ingredient in the pricing recipe that can only be done by someone who sells enough homes to have a finger on the market. Gut feeling.
Once I determine the value of your home by the comps and the “feeling”. We can then add about 10% on top of that. This gives us a great place to start, and ideally there will be 3-10 showings and a couple offers. This lets us know that we did not underprice your home, but we were not too high either. It is important when “overpricing” a home, that you are prepared to adjust the price quickly if the market does not respond in a favorable manner.