Determining Your Property's Value
When you give Legacy Real Estate Group at RE/MAX Integrity the opportunity to list your property for sale, you are choosing a process proven to make your property stand out in a competitive market, giving your property exposure to a maximum number of potential buyers. Our brokers are trained to guide you through each step to obtain the highest price possible for your property. We start our process with an initial consultation with you, which gives our brokers the opportunity to tour your property and complete a thorough Market Analysis. Your broker will also provide you with estimated Seller’s closing costs so that you can see your estimated net gain before listing your property. Your property does not need to be in “show-ready” condition for this initial tour and consultation. Your broker may take a few photos during their initial tour for their reference when preparing the market analysis. This is also a great time to talk with your broker about any recommendations they have for getting your property ready for showings. Plan on this initial consultation and tour to take just 15-30 minutes, depending on the property.
Real Estate brokers use what is commonly called a Comparative Market Analysis (CMA) to help sellers establish a listing price for their property. A CMA is an estimate of a property’s value based on similar properties in the immediate area that have recently sold or are active on the market and are comparable in age, square footage, number of bedrooms and bathrooms, and features.
Your broker will create a complimentary CMA for you after your initial listing appointment. We encourage you to schedule time to review this report with your broker to determine the listing price for your property. Determining the right pricing strategy from the beginning will result in a faster and more profitable sale for you.
The Value of your Property
In an area of similar properties, why is one worth more than the other? When a property is sold, a willing seller and a willing buyer determine the value of the property through their negotiated sale price. That price then becomes a benchmark for the future sale of similar properties. But price is influenced by more than just precedent. Here are a few of the most important factors when arriving at market value.
There are several things a property owner can do to improve the physical structure and aesthetic of a home but there isn’t much they can do about where it is located. Apart from standard market appreciation, a property’s land will only increase in value if the area around it improves.
Some key location factors that can increase a home’s value include:
- Proximity to city core
- Located in a cul-de-sac or at a dead end (less traffic)
- Farther away from railroad tracks, airports, freeway noise and power lines
- Near parks or green spaces
- Sidewalks and walkability
- Proximity to public transit
- Waterfront, water or mountain views
The size of the property and number of rooms it has impacts the value. In most cases, a larger home can be more expensive to build, and buyers will pay more for additional living space. The number of bedrooms and bathrooms within that square footage is equally important. A house with only one bathroom, for example, will have a lower value, even if larger square footage.
Not only can a larger home be more expensive to build but features and finishes within a home impact the cost to build. This category also reflects the upgrades or enhancements made by a previous homeowner. A home with hardwood floors and granite countertops will command a higher premium than a home with carpet and laminate. Energy efficient windows, backyard landscaping, and custom cabinetry are all examples of features that will increase the value.
The newer the home, the more value it tends to retain. It is generally perceived as modern, up-to-date, and perhaps safer. Homes that are outdated or in disrepair will sell for less to offset the cost of updating the property and potentially replacing old appliances and systems.
When a home looks appealing from the street, it is said to have “curb appeal.” Thoughtful landscaping, fresh paint, modern address numbers or a new front door can make a meaningful impression on potential buyers. While none of these updates can alter square footage or location, they certainly do make a difference.
Initial Pricing Matters
A thorough CMA is a critical part of the selling process, used to support the initial list price of the home. If the list price is not supported by comparables in the area, the property will likely not sell quickly. Sellers only get one chance at getting this initial pricing right. A new listing will generate more interest, generate more showings and typically will garner an higher sold price than a listing that has been active longer. If a property sits on the market for a long period of time, prospective buyers will wonder why it hasn’t sold and may begin to suspect defects or issues.
It is also important to consider buyer financing when pricing a property. The bank will not lend more than the property has appraised for. If a property is priced above market value, it may be difficult for any buyer to get the necessary financing to purchase it.
The Problems With Overpricing
Your Legacy broker will work tirelessly to get the highest possible price for your property. However, when a property is priced too high for the market, the following issues may arise:
- You may lose credibility. In many cases, buyers have already done their own research and have a general idea of what properties in your neighborhood are worth. When you price too high, they may choose not to consider your property and instead look for something at fair market value.
- Your property may be used by other brokers as proof that their listings have better values.
- Your listing may become stale. Buyers will start to wonder what is wrong with your property if it is on the market for longer than 30 days. You have the most leverage in the first couple of weeks.
What Does Not Affect The Sale Price
It’s important to note that the following do NOT predict your property’s sale price:
- The profit you wish to make from the sale.
- The money you’ve invested in improvements.
- The amount people have told you your property is worth.
- What you originally paid for the property.
- Past appraisals
- Tax Assessor’s Evaluation