Location! Location! Location! is the most crucial consideration in real estate and a major factor, if not the predominant one, in real estate pricing.
Setting the price at which to sell your home is not a simple formula, nor totally mathematical. Many elements factor into the decision. A calculated home value is not necessarily what you believe your home is worth. Recognizing this helps avoid overpricing, a major factor that leaves homes languishing or unsold.
Assessed value is the amount local or state government has designated for a specific property and frequently differs from market value or appraisal value. This assessed value is used as the basis of property tax and when a property tax is levied. The assessed value of a real property is not necessarily equal to the property's market value. Approximately 60% of U.S. properties are assessed higher than their current value.
WHAT IS YOUR HOME WORTH?
The first step in selling your home is knowing the difference between value, worth, and price. Let's examine the determining factors at work. Understanding those factors allows them to be leveraged. There are several ways a home's value is derived.
DIFFERENCES BETWEEN: MARKET VALUE, APPRAISAL VALUE, AND ASSESSED VALUE
Familiarity with these real estate terms can save disappointment and frustration, and allow the home seller to meaningfully engage in setting a home's listing price.
Nothing determines the sale price of a piece of real estate but the price at which it sells. Houses are not same-priced identical cans of tuna on the grocery store shelf or shares of stock valued and traded every day on the stock exchange.
The market value is what a willing, reasonable buyer would pay for the property to a willing, reasonable seller or "the most probable price a property should bring in a competitive, open market, under conditions requisite to a fair sale." Essentially, this is a pre-negotiation opinion of what a house should bring to its local market and geographical area or neighborhood.
Appraisal value is an evaluation of a property's worth at a given point in time that is performed by a professional appraiser. Appraised value is a crucial factor in loan underwriting and determines how much money may be borrowed and under what terms. For example, the Loan to Value (LTV) ratio is based on the appraised value. Where LTV is greater than 80%, the lender generally will require the borrower to buy mortgage insurance.
The important factors in a house appraisal are:
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Dwelling type (one-story, two-story, split-level, factory-built)
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Features (including design) - materials used and the kind of structure present and how they were built Improvements made
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Comparable sales
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Location - type of neighborhood, zoning areas, proximity to other establishments
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Age of property
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Size
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Depreciation
Condition, of course, is a crucial factor in valuation. Location is also a factor; however, a property cannot change location, upgrades or improvements to a residential property often can enhance its value.
COMPARATIVE MARKET ANALYSIS BY A REAL ESTATE PROFESSIONAL
Also called "property valuation" is the process of developing a perspective of value for real property.
This type of home valuation makes you understand your competition and will provide you with detailed information on each house sold in your area over the last six months. When done correctly, it is more helpful than automated online estimates.
THE SECOND STEP (SELLING YOUR HOME FOR MORE)
Prior discussion showed that there is no calculable certainty in setting the value of a home. There can be wide differences between the seller's assessed price, the asking or listing price (market value), and the price at which the home sells (sale price). Let's turn to what the homeowner/seller can do to elicit offers at, or even above, the listing price in a competitive market.
The seller's time, effort, and investment are the most important parts of the process. The seller's willingness to adequately prepare the home for presentation - and willingness to live in that pristine state for the time it takes to sell the property - will greatly affect both the sale period as well as the price at which the home sells.
A market in which homes normally sell in no more than six months of listing is considered balanced or neutral, which means a good number of homeowners are selling and buyers are purchasing. The typical selling time in a swift market might be 30 days, while that of a slow market may be up to nine months. Typically, any number below six months is considered a seller's market.
LIVING IN A FISHBOWL
A house on the market requires keeping the home in a constant "show-ready" condition, and changes in day-to-day life are inherent in the process. Sellers get unexpected phone calls at all hours from unrepresented prospects and buyers' agents to show the home, as well as frequent updates by phone, email, and text and show appointment scheduling messages from the listing agent. They also will likely deal with repair and reconditioning appointments and inspections. The house may be photographed for online, periodical, or brochure presentations.
There are repeated showings when the home first hits the market. Keep your home in pristine showing condition for impromptu visitors - the perfect prospect might just drop in at dinnertime.
CHILDREN (AND PETS) SHOULD BE UNSEEN, UNHEARD
Children and pets are distractions for potential buyers, affecting their experience of your home. You should plan for your children to be elsewhere and your pets crated or leashed, and no toys lying about or dog hair on the sofa. The dishes should always be done and the kitchen sparkling.
In an ideal world, your property would be shown to serious buyers only, but many real estate agents provide their clients with dozens of homes to consider without a clear picture of what the buyer wants. Low-interest traffic can be heavy and a burden on the seller's time, energy, and resources. What about the "Sunday afternoon window shoppers"?
Since a showing can take an hour or even hours out of your day, finding an interested buyer is what matters most. The home will be shown to many more uninterested buyers than interested buyers. How many times will you have to show your home?
That said, you shouldn't waste your time trying to appeal to uninterested buyers. This is where planning, organizing, and the professional help of a qualified real estate agent enables you to handle even the most intimidating tasks without wasting your efforts.
