What’s Your Home Worth?
When you decide the time has come for that change of scenery, upgrade to a bigger home or downgrade to a smaller home because you have become empty nesters, the first thing you look for is advice on what your home is actually worth in today’s current market place.
A very simple and key principle to the question of what your home is worth is this: The correct selling price of a home is the highest price that the market will bear.
But how do you determine what fair market value is for your home? That’s where the true value of a good REALTOR® comes into play. But then again, not all REALTORS® work the same way, and some may not have your best interest at heart. For this reason, the most important move you can make is to consider interviewing more than one REALTOR® in order to obtain varied opinions on the true value of your home in the current market.
CMA’s – What are they?
CMA stands for comparative market analysis. Every REALTOR® has their own way of determining what the selling price of your home should be, however the simple explanation of how they determine the selling price of your home is by comparing the selling prices of comparable homes in your neighborhood. It sounds pretty simple doesn’t it? In fact, you can often receive online valuations, or simply call up a REALTOR® who is willing to provide you a quick estimate over the phone, so it must be easy enough to do. At least that’s what many home owners believe.
Wise Decisions Will Save You Thousands $$
The reality is quite different however. There are many REALTORS® who will work very hard for you and who will have your best interests at heart. They want your business, and your referrals and to earn your trust and referrals they know they need to do everything they can to make sure you reach your financial goals. But, not all REALTORS® are created equal! Each one has their own style and has their own reasons for doing business the way they do. It is for this reason, it is always wise to interview more than one REALTOR® and determine which agent you feel will represent you the best and price your home properly keeping YOUR goals in mind. Here are a few clues to help you weave your way through what can sometimes be a challenging decision.
The Three Tiers
Every REALTOR® has their own method of working and in my experience I see three common listing presentations that are shown to potential clients.
1. CMA presentation based on a very limited numbers of homes in your neighborhood that are priced very low. A common practice, when asked by a client for a home valuation for a good listing price for their home, the REALTOR® will research all the comparable homes in your market area and select a small number of homes with the lowest prices. These homes are presented to you to show you the homes you will be competing with. When you compare the pricing, you will likely set the selling price of your home within a similar price range in order to be competitive. In most cases, should you follow this guidance, your home is likely to sell quickly, however did you get the most value for your home? There can be some value to pricing your home on the low end of the market, which I will explain later.
2. CMA presentation based on home prices on a limited number of homes valued on the high end of the market. This scenario does not play out very often, however is a sales technique that might encourage you to select a particular REALTOR® because he/she has advised you that your home is worth more money than what other REALTORS® are suggesting. After all, you want as much money out of your home as you can get, so you would rather list with a REALTOR® that says they can provide you with better financial results. By convincing you your home is more valuable than what others have recommended, he/she wins your confidence and the opportunity to work with you. The downside? The REALTOR® knows that your home will likely be on the market for an extended period of time. If after a few weeks you have had very few or no showings on the property, you will find that he or she is recommending that you lower your price to be more competitive. They won the listing by artificially pricing the home high during your listing presentation, however in the end, the reality is that the true value of your home is quite different, and your expectations are not met. This is not to say that even if your home is fairly priced that there will not be a need to lower your price to be competitive. As fluid as the market is, sometimes it is necessary to lower your price even on a well-priced home in order to stay competitive, particularly in a good seller’s market.
3. CMA presentation based on a more balanced estimate on a larger number of comparable homes in a varied price range from low to high that are for sale in your market area. This is the most un-biased method of providing an accurate selling price for your home. The REALTOR® is providing you with a wide range of pricing and property types to compare to, and guiding you to a selling price based on what your personal goals are. The CMA numbers are balanced. From these numbers you along with the guidance from your REALTOR® will help guide you to a well-priced and competitive selling price that will help you achieve your goals.
Your Selling Price Depends On YOUR Goals
Yes, the best selling price for your home is the highest price that the current market will bear, however there are times, when there is value to pricing your home in a certain way. For example, in exigent circumstances, whether it be financial hardship, family circumstances or you are simply financially comfortable and have an opportunity to move to another home better suited to you that you have put an offer on, it may be in your best interest to make your home more competitive in the market by offering a lower selling price. If you want to move your home quickly, your REALTOR® should be able to help guide you to a selling price that meets your needs without sacrificing more than you need.
If however you are not in a rush to sell, but want the best value you can obtain within a reasonable time, help your REALTOR® to understand what your financial expectations are and set a selling price that is within the scope of moderately priced homes are selling for. Patience is truly a virtue in this business, and it will pay off in the end. Keep in mind that a good home valuation simply cannot be done over the phone or using an online system. A good REALTOR® will come to your home and take into account many features in your home that can enhance the value of your home. He or she will know what the current market trends are and what potential home buyers are looking for. They will look at your entire property, taking into account the landscaping, finishing and upgrades as well as any other special features of your home that make it unique and could positively affect the value of your home.
It’s always FREE!
It probably goes without saying that home valuations to provide you a Comparative Market Analysis and determine an appropriate selling price for your home are always provided by every REALTOR® free of charge. You have absolutely nothing to lose by contacting and interviewing more than one REALTOR® in your quest to find who you feel will work in your best interest!