What is the most important thing you can do when selling your home? Price it correctly! Pricing a home correctly is the key to getting it sold quickly. Sounds like an easy answer but it isn’t always an easy thing to do.
One of the best reasons to hire a local Realtor to sell your home is that they have the knowledge to price your home correctly. You want to make sure you are using a Realtor that is familiar with your local market and has access to the MLS data in that market. Don’t be afraid to ask what MLS or MLS’s the Realtor belongs to when interviewing them. All real estate markets are different and so are the home values. You want to make sure your Realtor is familiar with the local market and can value your property correctly.
How does a Realtor come up with a price? We do a Comparative Market Analysis, or CMA, to determine a value for your house compared to similar properties that have recently sold. We do a search of the MLS records and find comparable properties in the same area that are currently on the market as well as homes that have closed. This is why it is important that your Realtor have access to your local MLS. You want to make sure that the comparable properties, or comps, are in the same area otherwise the pricing can be off. A home in Freeport of similar size, age and condition will not be worth the same as a home in Rockford or Chicago, so the data from those MLS’s will not be helpful in pricing your home.
By comparing the sale prices of similar properties during the recent time period, you can come up with a range of value that your home should be worth. Since there are generally not identical homes to compare, your Realtor will make adjustments to the sale prices to make them more comparable to your home. For instance, if your home has 4 bedrooms and the comps all have 3 bedrooms then generally your home value would be adjusted up. If your home does not have a basement and the comparable homes all did, then your home value would be adjusted down. By going through a series of adjustments your Realtor can arrive at a market value price for your home.
There are other factors that your Realtor will look at when pricing your property. Is there a shortage of homes like yours on the market or are there many homes like yours available? What is the condition of your home? If it is in excellent condition it might be more valuable but if it needs some TLC it might be worth less. What about location? Is your home on a sought after street with great schools or is it in an area with declining home values and few amenities?
These are all factors that a local Realtor will take into consideration when arriving at an asking price for your home. You should be able to look at the CMA that your Realtor has prepared and ask questions about anything that you don’t understand or something that doesn’t look correct.
The market analysis that your Realtor does is very similar to the process an appraiser will use when doing the appraisal on your home once you have an offer. It is important that your home is priced properly because it must appraise for the purchase price or the new buyer may not be able to secure a mortgage.
This is why you hire a local Realtor to sell your home. They have access to the necessary data to price your home properly and know the current market conditions that could influence the price of your home. It is almost impossible to be impartial when it comes to the value of your home. You have made it your own and it is full of memories that can make it very hard to be unbiased when coming up with a price. You need an impartial, fact based assessment and a local Realtor can provide just that. Homes that are priced correctly sell faster and closer to asking price than homes that are priced too high. Resist the urge to “just try it” at a higher price because you get the most activity when it first hits the market. If your home is overpriced buyers will move on to one that isn’t and yours will be sitting on the market even if you reduce the price later on. Trust your local Realtor’s opinion on the value of your home, they are the professionals and know the market better than you do!