Estimating Home Value Is Easier Than It Seems
With such a volatile housing market, its hard to predict how much your home will be worth five years, a year, or even just a few months down the line. Home value fluctuates rapidly
, and a home thats worth millions one day might be worth half that another. Estimating your home value today, then, might seem pretty near impossible.
In fact, estimating home value is easier than you think. All it takes is a little research, an establishment of range, and a willingness to be a little flexible on price. Here is an easy four step system to estimating home value in any market
SEE ALSO: 5 Tips For Simultaneously Buying And Selling A House
1. Get The Correct Information
The best place to begin your search is right here, on the internet. Using an online calculator or a simple search of comparable homes in your area, you can get a general sense of what homes that are similar to yours are selling for. However, take note: just because a home is listed for a certain price doesnt mean it is going to sell for that price
. If a home has been on the market for a long period of time, chances are, its not worth the price it is listed for. Therefore, you should look for houses that have already sold instead of ones that are still on the market.
For a second opinion, you can ask a listing agent for a free walk-through and comparable market analysis (CMA)
. This precise analysis includes comparable properties in your areas, factors that make your house unique, and an analysis of the current market conditions. Compare their findings to yours before choosing a listing agent, though, because some might just be attempting to sell you on their services.
2. Establish A Range
Once you have sifted through this information, identify three to six homes in your area that are the most like yours and have recently sold
. Compare the numbers for these homes and find the average listing price, sale price, and time on market (TOM). This number should give you a relatively solid estimate of how much your home can go for. However, keep in mind that prices fluctuate, so you should keep an open mind to estimates around your ideal price. Being strict on sale price will only lengthen your TOM.
Also factor in how fast you need to sell your house
. If you need a quick sale, then youll probably have to price your home lower than what others have sold for. That way, it will seem more attractive to potential buyers.
3. Find Your Fair Price
Once you have compiled all of this data, youll need to decide on the fair price
. This price should not be your bottom dollar, but should be fairly close to it.
Finding your fair is one of the most important parts of the home valuation process because it will give you direction once the offers start rolling in. Just as you shouldnt go to a used car dealership with no idea what your limit is, you shouldnt go into the home selling process with no idea what your home is worth
. Otherwise, you might end up selling your home for much less than you had hoped.
Once you have decided on how to price your home, knock a few thousand off
. For example, if your fair price is $300,000, list it as $299,000 or something like that. Houses priced just under a century number have a positive effect on buyers because they seem a lot cheaper than they are. In the end, you might get the $300,000 anyway if there is a bidding war, so no reason to fret over the extra thousand.
SEE ALSO: Everything You Should Know About Seller Financing
4. Market Yourself
Once youve decided on your fair pricing, advertise your home to death
. In a hot market with a low enough price, you could induce a bidding war. But dont count on one. Remember your bottom dollar and go with it. You dont want to sell your home for a price youre not comfortable with.
That being said, studies show that if you overprice your home and it stays on the market too long, you might have to resort to lowering your price beyond your comfort zone. Remember, your fair price is key in any market, buyers or sellers
. No matter how tempted you may be to price above it, do not do it. Otherwise, your competition might take away any reasonable buyers and leave you in the dust.
Though success on the housing market is never a guarantee, using this system can help you competitively price your house. With enough marketing, a fair price, and a little leniency, you will get the amount you want for your home.