Here are some keys to help you accurately value your home …
When trying to value your property there are quite a few considerations that help you arrive at an accurate value. Basically, you compare your home to the other homes of the closest type that have recently sold. Please note that only sold prices are used in this process. That is how appraisers do it, and that is the truest measure.
Having located the sold information a few homes similar to your which have recently sold, you examine the features between the properties and make adjustments to your home’s value based on how your home compares to the similar properties. The real estate slang for a comparable home is “comp.”
For example, if you own an Ingalls model and 2 other Ingalls have sold in the past 6 months, you create a table and compare the 3 properties – your home and the 2 comps. Your home may have a better lot, a nicer kitchen and an extra full bathroom, but the other Ingalls have screened porches which your home lacks. You calculate the values for these features, adding and subtracting values to your home until you arrive at a likely sellable value for your home.
As homeowner’s we all feel very strongly about the features and condition of our home when we compare it to similar sold properties – it’s natural. However, the most accurate pricing requires some objectivity. Buyers seldom offer more than can be justified by the comp-methodology.
Some Realtors will suggest offering properties with inflated values in hopes of obtaining a better return for their client. This hopeful pricing, while exciting the sellers, is usually doomed. Today’s buyers are very knowledgeable thanks to the wide-spread home sales data on the internet. Buyers compare properties with a very critical eye. If your home is overpriced, it is ignored in most cases. Buyers just skip past an overpriced listing because there are many homes to choose from … a buyer may not want to fight an uphill battle over price. If your over-priced property doesn’t sell, you may lower your price. Lowering a price does not necessarily bring those buyers who “skipped” over your listing. Many times buyers won’t be altered to your price change because they have already “passed” on your listing.
In summary – listing at a fair marketable price will allow your listing to be considered by the largest slice of available buyers.
Further, an inflated price, even if a buyer agrees to pay it, may fail to go to closing because the lender will not make a loan unless the property is priced in line with an appraised value. If someone offers to pay $320,000 for your home, but the appraiser, using the comp method outlined above, values the home at $295,000, there will be an issue with the lender. Remember, there are lawyers, lenders and buyer’s agents that will be very critical of any price which seems out of line with the market.
The price per square foot is a valuation method widely used in Chicago’s market and has become a pricing tool used in the suburbs more and more. While 2 homes having identical square footage may be widely varied in real value, the price per foot is still used as a measure of market value.
Compare your home, feature by feature, to other homes which are very similar to yours that have sold recently. You can Click Here to view recent Prairie Crossing sales.
Finally – Every home is different. The best way to come to an accurate, marketable price, is to speak to a professional.