l The first step I take is to order all the information that is available about the property from a title company. This will help me determine the specifics of the property such as the legal description, square footage, age, lot size, etc.
l Before I describe how I determine market value, it is important to define the term. First of all, the harsh truth is that the market value of your home is NOT what you have invested in it, what you need out of it, what you want, what it appraised for, what you heard your neighbor's house sold for, or what the County says it is worth. Nor is it based on memories, sentimental value, or the prices of the homes where you are moving. It isn't even necessarily what I, or any other Realtor, says it is.
l The true market value of your home is what a buyer is willing to pay for the property. It is based on today's market, today's competition, today's financing and economic conditions, the buyer's perception of condition and value, the location and marketing time. To estimate a market value for your property, all these things, and more, have to be considered.
l As an art, there is no one way to determine a market value, and I use a variety of methods depending on the property. Generally, I will start by researching all properties in your subdivision or neighborhood and other comparable properties in similar areas that have sold. The most recent sales will give the best indication of current market value. Unlike a formal appraisal which will use only three or so comparable properties, I consider as many as possible which gives a broader perspective of value and the market trends. I will compare the amenities, features, and condition of each of these properties to yours. I will do an analysis of each property in terms of its dollar per square foot, days on the market, etc.
l Next I research County records and study the County's estimate of market value for your home and the comparable properties I identified in the first step. Though the County's estimate of market values is rarely accurate, it is based on a statistical methodology that can provide additional insight into the true market value.
l At this point, I may also consider the replacement cost of your property, the income produced if it is a rental property, consult other Realtors for their opinions, and utilize other methods as required. I will also research the comparable properties that are currently on the market that will be in competition with yours. What price homes are listed for in today's market does not necessarily reflect market value, but if a buyer can buy a property like yours for less money, then we need to price your property accordingly, regardless of what comparable properties sold for in the past.
l Timing is perhaps one of the most critical issues to consider. If you are bringing the property on the market in the dead of winter when there are fewer buyers looking for homes, the market value may be less than during the peak summer selling season. Also, if homes like yours take 6 months to sell on average and you have to sell in one month, then we will need to reduce the price. Timing the sale is another reason to start the planning process early.
l Another key element in market value and how quickly your property will sell is how easy it will be to show to prospective buyers. People have a tendency to want what they want, when they want it. If buyers cannot see your home when they want to see it, they will look at one they can. If a Realtor has to jump through a lot of hoops to make an appointment to show your home and perhaps wait 24 hours, and there are other homes like yours that are easy to show, guess which home is shown? No one likes strangers coming through their home, but if you don't make it easy to show, it is likely that your home will take longer to sell and at a lower price.
l It is at this point where my education and experience is critical in the art of correctly interpreting all of this information and estimating a market value. I will provide you with upper and lower value ranges for your home, as it is important for you to understand both the best and worse case scenarios. Then we will need to consider the timing, the desire for buyers to negotiate price, and the condition of your property before deciding on a list price. This leads into the next important planning step, which is Staging your home.