Setting the right price from the start is among the most important steps toward successfully selling your home. This requires taking an indepth look at what other similar houses are selling for to determine the market value of your home.
Your house has many values to the tax assessor, your lender and insurance company, and to you. It also has what’s called market value to prospective buyers. And I know what you’re thinking… Great but What’s My House Worth?
The definition of fair market value, whether it refers to a home, stock or any other item or investment property, is the price that a willing buyer and seller could be expected to agree to on the open market without any special circumstances to pressure either party.
Many factors contribute to a home’s fair market value and can cause it to change over time. Generally speaking home values tend to appreciate through inflation over time, however, markets can fluctuate during recessions and other economic downturns and values can fluctuate. Investing in home improvements or constructing an addition can cause a home’s fair market value to rise dramatically. Location also plays an important factor, with homes in desirable neighborhoods gaining value as those in economically depressed regions or unsafe neighborhoods losing value.
When working with sellers to determine a listing price or with buyers to check the value before offers to purchase, real estate agents perform what is known as a Comparative Market Analysis, or a CMA.
A comparative market analysis is a comprehensive report, usually compiled by a real estate agent, which contains information (comparables sales, sometimes referred to as “comps”) about houses similar to yours (in size, amenities, condition and location) that are either on the market, recently sold, or were listed but expired (usually, because they were priced too high and no one bought) within a recent time period (usually within the past 6 months, but in instances of limited comparables sales these can be taken as far out as 12 months). It’s ideal to have your CMA look back no more than three months when the market is in transition, and no more than six months in a more stable market.
A good CMA can tell you:
- what homes like yours are actually selling for
- how long it’s taking for them to sell, and
- what their sale prices were in relation to their list prices (the difference between what people actually got for their house and what they asked for).
- and where prices and the overall market is trending
It’s especially important to pay attention to the prices of pending, rather than closed, sales, for the basic reason that they’re the most recent (however, their sales prices will not be recorded yet and these comps merely reflect the prices at which comparable homes need to be priced in order to secure offers).
While a Competitive Market Analysis (CMA) will be utilized in determining the best price obtainable for a property, this value can only truly be determined by testing the market and challenging the competition. In the end, it is the market that dictates the value based on current conditions, number of Home Buyers, etc. Below are some of the factors that will be considered, and which contribute to a home’s market value:
o Size of house & lot
o Floor Plan & architectural style
o The number of similar properties for sale
o Their pricing, financing terms, location and physical condition
o Interest Rates & availability of financing
o Buyer Demand (Market Status – buyers or sellers market)
o Prices of recently sold properties
o State of the economy
o Seasonal demand
o Time on the market
o THE AGENT YOU SELECT TO MARKET AND SELL YOUR HOME!
Factors That Have NO Effect On The Current Value Of Your Property:
o What you originally paid for the house
o The cash proceeds you want or need from the sale
o Opinions of your friends & neighbors with regard to your property value
Determining The Best Price Obtainable For Your Home
Comparative Market Analysis
To help determine a price for your home, your agent will prepare a Competitive Market Analysis (CMA). Buyers engage in comparison shopping and they will not pay more for a property than they could pay for another similar property. If your home is not priced in accordance with similar homes, you will not realize as many showings which will result in a delayed sale and ultimately a lower sales price. The CMA will use the following;
Recently sold properties
Reveals what buyers have actually paid for similar properties.
Currently for sale
Shows the properties with which your property will be competing for buyers’ attention.
Demonstrates what buyers are not willing to pay under current market conditions.
If you, or someone you know is considering Buying or Selling a Home in Columbus, Ohio please give us a call and we’d be happy to assist you!
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Downtown Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Galena 43021 Hilliard 43026 Lewis Center 43035 New Albany 43054 Pickeringto, 43147 Polaris Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235