How To Determine What Your Home Is Really Worth
There’s a good chance that your home is not worth what you think it is—and what ultimately determines its value might surprise you. If you’re thinking that you or your agent have a say in deciding your property’s worth, then this is information you need to hear before pricing your home for sale.
What Doesn’t Decide Your Home’s Worth
Every home essentially has two values: what the market is willing to pay for it and what the current appraisal value is. These two things are not always the same and may differ greatly from your expectations. So how can you determine what your home is truly worth? Let’s first discuss what doesn’t factor in: your realtor.
While we wish we could determine your home’s price and let you profit beyond your wildest dreams, the truth is we simply can’t. As a real estate agent, my job is to tell you the absolute, low down dirty truth—and it’s not always going to align with your perceptions. It’s completely normal to overvalue your own house when you’re emotionally connected to it. While you’ll be thinking of fond memories and all the fun times you’ve enjoyed in your home, the market will not be taking these things into account.
Let The Market Speak To You
That brings us to what does determine the value of your home: the market. What creates the market are recent home sale prices, which neither you nor I have control over. There will be no room for emotions in this arena, so prepare yourself before you list to view this as a business decision. Doing so will help you to have a smoother transaction and ultimately net you a higher sales price.
Plenty of agents will simply tell you what you want to hear and price your home at whatever number you present. But rather than set your expectations high only to have you disappointed, I pride myself on being an area expert that can interpret the market for you—which is where the value of your home will be set.
The real estate market is a simple equation of supply and demand. The more demand, the higher the price. The less demand, the lower the price. Even during favorable market conditions, we still don’t get to determine the sale price. Why? Because buyers are going to offer based on recent home sale prices and not on what you or I think the home is worth. As they’re touring the market, they’ll base the value of homes on the recent sales they are seeing. While it’s true that every once in a while a buyer might overpay on a property they fall in love with, there’s less than a 10% chance this will actually happen.
Getting The Price Right
The name of the game in pricing is leverage. The key is to find a perfect price that will attract the most traffic from potential buyers. The more offers you receive, the more leverage you have to work with. This will then allow you to net the most amount of money for your property. Finding the right balance will allow you to create a sense of urgency. This urgency then helps you to sell your property during the critical early weeks on the market. Otherwise, you risk tainting your property.
If you start out with an overvalued listing price, your interest and showings will likely be few. The longer your property sits on the market, the more buyers will start to question it. Something must be wrong with that home, they might think. Or, if it hasn’t sold, it must not be worth what they’re asking. While your original goal may have been to net the most profit, you’ll start attracting lowball offers instead. The first two weeks of your listing are your best chance at getting the most profit for your home. If you price slightly below market value, you can create the buzz you need to pull in offers.
Logging on to Zillow to get your “Zestimate” is also not a viable option in determining value. This computer-generated information can’t possibly take into account all the factors that go into pricing your home. Does Zillow know if you have granite countertops or tile? What you need is an expert to interpret the market for you based on solid, professional experience. Because, again, the market determines the value of your home.
I hope this information helped you to understand how to determine your home value. The market speaks, and all you need to do is listen to it carefully to correctly price your property. If you’re curious about your home value, I’d be happy to come to your house and give you a comparative market value assessment on your property. And remember, don’t be upset at the result. I’m here to tell you the honest truth of what your home is really worth.
Feel free to contact me here if you have any additional questions, and I’ll be in contact with you as soon as possible!