This is the first in a series of blog posts on the Ten Questions That May Help Your House Sell Faster.
Today we are focusing on question #1: Is my list price in line with the range of today’s fair market value?
How do you determine fair market value? Does it have anything to do with how much you paid for your home? Does it bear any relation to what your neighbors think it is worth? What about those websites that give you a “guestimate” of the value of your home?
All of those pieces of information can serve as a general guide, but none of them will give you the necessary information to make an accurate pricing decision. For that you need the guidance of a Comparable Market Analysis, also known as a CMA.
The process of creating a CMA is a closely guarded secret, one that has been handed down from the ancient sect of scholars known as Real-Tors. Tor of course is the title of honor given to tribal leaders. Apprentice scholars are known as Mini-Tors, until they successfully complete their 90 hours of mandantory studies, pass the rigorous examination process, and take a blood oath. At which point they have to master an intricate hand-shake, and gain the password necessary to enter the library known as the Matrix. Finally, the tribal elders meet under the fifth full moon of the year and bestow upon the worthy Mini-Tors the honory title of Real-Tor.
In all seriousness, the process is actually fairly straight foward. It works on the premise that the near future will resemble the recent past. Based on that premise, if you are able to determine what a home that is similar to yours has actually sold for in the recent past, you should be able to determine what it is likely to sell for in the near future. Basically, we find other homes like yours and compare these homes to yours.
As a Realtor®, I perform a careful analysis of the data available through the Multiple Listing Service to help you make an informed pricing decision. I take a look at three different categories of homes that are similar to yours in terms of size, style, location, and condition.
I consider SOLD properties. This is the category that you may consider most useful, as it tells us what has actually happened in your neighborhood. Of course, information on a recent home sale is more relevant than information on the price of a home that sold a 12 - 24 months ago. Also, the more similar to your home it is in terms of location, size, style, and condition, the more helpful this information is.
Likewise, I also consider EXPIRED listings. These are homes that the seller tried to sell but failed to sell. There may be a variety of reasons why a given property fails to sell, but when we take at a look at the market data as a group it becomes easier to see what prices did NOT work for a home similar to yours.
Finally, you must consider CURRENT listings. These are homes that are for sale RIGHT NOW. This is your competition.
By taking a close look at these categories, it becomes relatively easy to determine a range of listing prices that will get your home sold in a timely manner. What price you actually choose within that range will be decided between you and your Realtor®.
The best practice is to price your home low enough to attract the attention of most of the buyers who are shopping within your price range. You want to attract them quickly, before they lose interest and make an offer on a competing home. Pricing too high is likely to be far more dangerous than pricing too low. Price too high, and you may receive little or no offers within a time frame that suits your needs.
Price on the low end of the range, and you may just sell your home faster than anticipated. More than likely, especially in today’s market, you will attract multiple offers. This in turn may lead to a bidding war. In that event, you get the best of both pricing strategies. You are able to sell your home quickly, and for the best possible price!
I trust that this article has shed light on the ancient and mysterious process handed down from the Real-Tors. When you are ready to sell your home simply contact me, and I can help you determine the best possible price for your home as well.
For I am no longer a Mini-Tor. I am a Realtor®!