Valuing a home for sale correctly is the most important part of selling a home. When it comes to selling your home, one of the most important decisions is price. How much can you get for the home? What amount of money is enough for you to part with it? What’s the best way of valuing a home for sale? People may cite “price per square foot” as a rule of thumb, but this is usually inaccurate at best. There is much more that goes into a home besides the square footage. Additionally, some websites (like Zillow or Trulia) will give you a number based off of an algorithm, but these are rarely correct, as they do not include many of the features of the house.
There are many factors that influence the price of a home. However we will cover the basics on valuing a home for sale here.
Valuing a Home for Sale
LIKE KIND HOMES AKA “COMPS”
One of the easiest ways to get a feel for the price of your home is looking at the selling price of comparable homes, or “comps.” Look for homes that are similar in size, features, and location to yours, and sold recently. You want them to be as similar to your house as possible, and to have sold as recently as possible. The more similar the home is to yours, the better approximation of value you will get. Additionally, the more recently a home was sold, the less likely it is for market fluctuations to have changed what it would be worth now. This will help give you an idea of where to start; however, it’s important to note the differences between your house and the comparable houses.
Also keep in mind that some comparable homes may not be completely accurate. A home sold due to death, divorce, foreclosure, or short sale may be sold in a hurry – meaning that it sells for much less than it would normally be worth. Unfortunately, these kinds of sales often bring down the value of other homes around them.
The location of a home can be a huge factor. For example, if you had two identical homes, but one was next to the beach and the other was several miles away, the one next to the beach could be worth several hundred thousand (or more) above the price of the farther one. And if these homes are both in San Diego, they might each be worth several times the price of an identical home in rural Alabama, or somewhere else.
Location is important for many reasons. These include proximity to shopping, food, entertainment, and the like, as well as school districts. In fact, many people with children will look for homes in a certain area purely for the great schools in the local district. The location of a home can also be a determining factor in whether or not it is expected to appreciate in price, which in turn influences selling price. Homes in highly desirable areas that are expected to consistently be in demand are expected to rise in price over time, and this potential for future return on investment also makes them more expensive right now.
Location can even affect two homes in the same neighborhood. Homes on the end of cul-de-sacs are generally more expensive, as it is a more private and less-travelled location. Homes on the corners of streets within neighborhoods are usually viewed more favorably, but ones on busy street corners (or busy streets in general) are not.
The size and amenities in a home are also important. One of the most obvious is the size of the house itself, as well as the size of the lot it is on. Land is good for appreciation, as land can gain value even independent of the house built on it. What percentage of the lot is usable is also an important factor – while a big lot that is mostly hillside will fetch more than a much smaller lot, a big lot with a great deal of flat, usable land will be worth more than either. How this land has been used, or can be used, also matters. Is there a pool? If not, is there room for one? How has the landscaping been done?
The size of the house is obviously very important, but this factor does not exist in isolation. How appealing a house is can also be affected by the floorplan, including whether it is single-story or not. A single-story house will be worth more than a two-story house with the same square footage. What is in the house also matters: the appliances, flooring, and other fixtures can make a big difference. A large gourmet kitchen is valuable, but would be even more so if furnished with new, high-quality appliances.
Other features, like being in a gated community, or having a spectacular view, can also be a big plus for your home. Privacy – being a little farther from your neighbors, having tree cover so that others can’t see into your yard – is also usually a positive.
AGE AND CONDITION
The age of a house has a large influence on price, as people almost always prefer newer houses (with the exception of special historical/antique homes). Newer homes are built better, and are less prone to problems. They are also usually in better condition, but not always. The condition of a home can have an effect regardless of its actual age. An immaculate 20 year old home may be worth more than a 15 year old home that has not been properly maintained.
Remodeling can have a huge impact on potential price, as it updates the look and feel of a house, as well as often using better/newer materials. While the age of the home will still be a factor, a thorough remodel can lessen the negative impact of a home’s age, and make several different features of the home more appealing.
At the end of the day, the price of your home all comes down to you. How much money would it take for you to be willing to part with it? If your home’s market value is only $500,000, but it is only worth it for you to move if you can get at least $700,000, then it is probably not the time to sell your home. Remember that you can set the price at whatever you would like it to be, but that having the price too high may make it difficult to sell. You also do not want to set the price too low – while it will probably sell quickly, you don’t want to lose out.
The best way to find out your home worth is to talk to a professional real estate agent or an appraiser. A professional appraiser can tell you what your house is worth, based on a market analysis of similar homes and an examination of your home in particular, but this is about all they can tell you. A good real estate agent can not only tell you what your home might be worth, but can also give you a detailed marketing plan, as well as informing you on the process involved, as selling a home involves a lot more than just setting a price. There are contracts and terms to be signed and decided, marketing to be done, open houses to be held, and more.
Related Articles to Valuing a Home For Sale:
Use these additional top home selling tips to make the right decisions when selling. Mistakes can happen very easily when you don’t follow sound advice.
- How to find a Realtor to Sell Home
- 15 Ways to Prepare your Home For Selling
- How to Value a House
- Should you sell home without a real estate agent?
About the author:
The above Real Estate information Valuing a Home For Sale was provided by James Jam. The #1 Individual Berkshire Hathaway HomeServices Real Estate Agent in San Diego County. You can reach him via email at firstname.lastname@example.org or by phone at 858-210-0509.
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