What’s the Value of Your Home?
You’ve spent the past ten years in your home, lovingly taking care of it, repainting, remodeling, and making it the best home for your family. Of course you’re attached to it, and understand the value of it beyond money. But the love you feel for the home you’re about to sell has nothing to do with the actual value that has to be calculated in order to figure out how much to ask.
Plenty of homeowners use rumor, need, and their feelings for their home to tell themselves how much their home is worth. In terms of the emotional value, your home is priceless. In terms of how much you can sell it for? The value is the amount a buyer is willing to pay.
What Affects the Value of Your Home
When you sit down with a real estate professional to talk about listing your property, and the conversation turns to asking price, your agent is looking only at objective factors to help determine actual value.
Competing properties on the market: If you want to ask a price that is far and above other similar properties in your area, you’ll price yourself out of the market.
Available financing: When lending is tight or jumbo loans are hard to get, asking a price no one can get a mortgage to finance could be a problem.
Your home’s overall condition and appeal: You love your home, but will the average buyer see something they have to renovate or something they can move into with no problems?
The economy: When jobs are being lost and the economy isn’t growing, people don’t pay top dollar for homes.
What buyers have already paid: When we look at homes like yours that have sold, it’s important to pay attention to what buyers were willing to pay. They likely won’t pay much more without a very good reason.
Supply and demand: A lot of homes on the market means greater competition for buyers’ attention which can lower values. Fewer homes means you may field multiple offers and higher asking prices.
Location: If your home is in a hot neighborhood that people want to move to, it will have a higher value than if you live in an area where very few people want to go.
What Doesn’t Affect the Value of Your Home
You’ve done your homework, and you know what things cost, so you’re certain you know what determines the value. If any of these things are on your list, cross them off.
How much you need to sell your home for does not determine the value. It may, however, determine whether you need the bank’s approval to accept an offer as a short sale.
A bank or tax assessor appraisal may determine what taxes you owe or how much risk the bank is willing to accept but it isn’t a sign of the true value.
You heard a rumor through the neighborhood grapevine what your neighbor’s house sold for. Rumor and speculation aren’t good enough. We need to look at the facts in a comparable analysis.
The amount of insurance you have on your home is designed to rebuild and replace everything, from the ground up, in a devastating situation and a big claim. That amount is the not the same as the value of your home.
Homeowners put a lot of money into their home in upkeep, maintenance, and renovations. While you may get some of it back in the sale, you’ll never get every penny. Using that as a factor in valuation can lead to overpricing.
The cost of the home you want to buy next will be a factor in your ability to afford it and potentially qualify for financing. It will not, however, have a thing to do with the value of your current home.
How We Determine Your Home’s Value
Your real estate agent, in discussing your home’s value, should be able to point to facts about your neighborhood, the real estate market in general, and the prices buyers have been and are willing to pay for homes like yours. We look at the most recent closed sales and pending sales of homes that are similar to yours. We also look around the market at competing and currently active properties comparable to yours.
The value, which will determine your asking price, needs to be competitive with other homes on the market. If we’re going to ask a higher price or determine a higher value, there must be cold, hard facts to support that decision - the neighborhood, your home’s condition, and the current supply of inventory are just a few.
Why does it matter so much? The longer your home is on the market, waiting for an offer, the bigger the difference between what you ask for and what your home sells for. Four weeks or less, and you’ll likely get your asking price. After that, the value and pricing drop from 5 to 10 percent depending on how long your home sits on the market.
It’s critically important to get the value and the price right from the beginning. When you’re ready to sell your home, work with the professionals who can guide and educate you through the entire process. My team and I will help you understand the value of your home and help you determine a price that will sell your home. Contact us today and let’s talk!