Did you know the average home is on the market for around 39 days? The time frame encompasses from when the house is listed until when it closes. Homes are selling about 30% faster than they have in previous years.
The listing price is one factor that contributes to how quickly your home sells. Pricing a home too high could result in not many offers. On the flip side, pricing your home too low could result in you getting less money than your home is worth.
Knowing how to price your home for sale is essential. Since interest and demand in a home decrease a few weeks after a home is listed, you want to ensure you price your property appropriately. This guide will discuss everything you need to determine your house’s asking price.
How Do I Know How Much My Home Is Worth?
There are three types of valuation to consider when you get a home estimate. These figures will work together to help you develop your list price.
Fair Market Value
Fair market value refers to the price your home would sell for compared to other houses in your area. One way to determine this number is to look at a house similar to yours in your neighborhood. Look at the following features in comparable properties:
- Square footage
- Number of bathrooms and bedrooms
- Outdoor amenities
This is one of the first things a realtor will do when pricing your home. A realtor will look at comps to determine what buyers have previously paid for similar properties. Your home’s fair market value will help you see if the price you’re thinking of is too high or low compared to others.
Assessed Value
Local tax assessors will use your home’s assessed value to determine how much property taxes you pay. A tax assessor will take your home’s fair market value and appraised value into account when determining the assessed value. They’ll also evaluate if you’ve done any home renovations, have tax exemptions, or generate income from your house.
Usually, your home’s assessed value is less than its fair market value. It’s not an accurate figure of what your house could sell for.
Appraised Value
When your home gets appraised, it takes comps into account. However, your home’s appraised value differs from the fair market value.
A licensed appraiser will visit your property. They’ll look at renovations you’ve done to your home, the location, and the condition and size.
When potential buyers apply for a mortgage, their lender will look at the appraised value. You want your home’s appraised value close to your asking price. If your asking price is too high, a mortgage lender might not loan that amount to a potential buyer.
How to Price Your Home for Sale
There are a few ways you can evaluate how much your home is worth before you list it. Let’s discuss some of the most common ways.
Get a Comparative Market Analysis
Your real estate agent will typically offer a free, comparative market analysis before you decide to list your home with them. The realtor will look at the data from recently comparable houses sold in your neighborhood. They’ll then review the unique amenities of your property and the information they know about where you live.
The realtor will use all of that to estimate what they think your home’s list price should be. If you’re buying a home, your agent will typically do the same thing as you prepare to make an offer on a property. An experienced real estate agent will have the tools and expertise to provide you with an accurate estimate of your home’s value.
A comparative market analysis might be 30 or more pages. In the analysis, you can find the following information:
- 10-12 comps within a specific radius of your house
- A deep dive into your property, including new features and images
- A summary page for each comp
- Tables and charts that illustrate current market trends
- A map of all comps included in the report
Gathering information for comparative market analysis is something you can do yourself. An experienced real estate agent will have access to tools that you might not. They also have experience reviewing the correct data and determining a home’s value.
Look at Your County’s Website
County tax auditors will assess the value of homes every so often for property tax reasons. You can find this information online.
You might be able to look up the value of your home to see if it’s appreciated. Additionally, you can review the assessed value of comparable homes in your neighborhood.
Remember that this figure is just an estimate of your home’s assessed value. It might not consider factors that could affect your home’s listing price.
Partner With an Appraiser
A mortgage lender will hire an appraiser to determine a home’s value before they approve a potential buyer for a loan. It’s a good idea to hire an appraiser before you list your house for sale.
The state licenses certified appraisers they operate in. Remember that you’ll have to pay for the appraiser out of your pocket.
As we said, an appraiser will come out to your property if a potential buyer is getting a loan to purchase your home. If their appraisal is lower than what you priced your home, you might be in trouble.
If this happens, the potential buyer can attempt to negotiate a lower price. You don’t have to reduce your price, but the buyer can walk away at this point. Additionally, the mortgage lender can reject their loan if there’s a significant difference between the list and appraised price.
Partner With a Reputable Realtor to Sell Your Home
Trying to figure out the value of your home can be confusing. An experienced real estate agent can assist you with how to price your home for sale. They have the experience and tools required to price your home, so it sells quickly.
Are you ready to sell your home and move on to your next adventure? Contact Brett McCurdy Homes today to learn more.