Home Valuation is not a science. We are in a complex market. Are prices heading up again? Are they stabilizing? Are prices yet to take a hit? How then can we truly find an appopriate price for a home?
It takes local knowledge from a seasoned professional to really come up with a true value of a home. Maybe even an appraiser can not come up with a real value if they are “out of area.” There is no way these appraisers (or agents from out of the area) could have actually gone into the comparable homes. A local real estate agent who specializes in your neighborhood most likely will have been inside (maybe even more than once) most of the comparable homes in your neighborhood. Local real estate agents preview homes constantly as they come on the market during broker open tours as well as when they are showing property to their buyers and/or they have just been in the house since – as local area specialists you’d think they must live in the neighborhood and know the neighbors. Knowing the comps on paper and knowing the comps in person are two very different things. As an agent we can certainly gleen certain information from the MLS data – pictures, description, agent notes often tell a certain story, but being there in person really is the only way to “know” a house and it’s flow, footprint, flaws, etc. These are what really add or subtract from a homes value. Square footage, year built, recent remodels – granite, stainless, wood floors, etc… – do add value as well. But a quirky floor plan is hard to forgive.
Just looking at the comps on paper again is just not enough. Digging deeper, making some phone calls and researching time on market, distressed or not seller situation, what type of financing was used? These are all conditions that could make a difference in the pricing of a home, which in turn may or may not hurt the price of your home.
Noting the difference between the “asking” price of a home and then the “selling price” of a home can tell a story in itself. Clearly there is a relationship between time on market and the selling price. The closer to the list date typically closer to the list price a home sells for. The longer a home sits on the market, the further away the sales price is the original list price. How many price changes were made on a listing before it sold? These are all ways to really help determine what a home’s true value is. Often, a home that is priced right to start with will sell for more than a home that overprices and then follows the market down in price. This type of sale typically ends up as a loss for the seller. It languishes on the market and then looses steam and people start to wonder what is wrong with that house and in the end it sells for less – typically.
Valuing a home requires a full inspection of a home – inside and out. A discussion with a homeowner as to what improvements have been made can add value to a home and without knowing what those improvements are one can not accurately price the home. Obviously, market conditions drive the price as well. How many homes are currently for sale in that market? What has sold recently? What homes are pending sale and will offer the latest comps to come?
$/sq ft – can be useful in a “cookie cutter” neighborhood where all the homes were built the same year and have not been remodeled too much yet – think a newer planned unit development. (You know – there is floorplan A, B or C.) In an average suburban neighborhood built in the 50’s, there is too much differnce in all the homes – remodels, additions, improvements, etc to compare them this way. One can come up with a general average dollar per square foot, but of course the smaller the home that greater that number will be and vice versa.
As you can see, it’s not a science. There are so many factors. Please be sure to call a professional realtor in your area who is knowledgeable and who has been “around the block” for a while as they will have been in the comparables and will know it by heart typically.
