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Determining Your Home's Value - Tips Before You Set The Price Of Your Home
By Justin Renaud
It seems like there should be some formula that helps you decide how you should price your home. Unfortunately, there is no scientific method for determining the value. Assessors and REALTORS® understand that this process involves a number of factors, all subject to human opinion and/or error. Before you sit down with your REALTOR and determine where you should price your home, there are a couple of things you need to consider.
Price-Setting Tip #1: Use Recent Comps Only
If you've ever had your home assessed, you have certainly seen a list of "comps" or comparable homes, which the assessor compares your home to. This is the first important step you can take when you are considering setting the price for your home. When you decide you are ready to look at comps, keep the following factors in mind:
• Avoid using properties in the area that sold more than a year ago. Include only comps that sold within the past year.
• Consider the market in your area in order to determine the duration of the "peaks" and "valleys." The Rolla/ St. James market has peaks and valleys that are much more gradual, so a year back is a sufficient starting place.
Price-Setting Tip #2: Use Sold Homes Only
The second mistake that plagues sellers is using comparing their home's price to another home still on the market.
• Homes that are still on the market obviously have not sold. Their price might be the reason, so using their price to set your own might not give you a good indication of fair market value. A house's price is no indication that it will sell.
• Looking at homes that have already sold will help you focus on the goal of selling your home and give you a good indication of what has actually been successful.
• Finally, consider the size of your community when deciding the area to use for your search. In small communities (like Rolla and St. James), make sure that you are searching in a larger area. Whereas large communities are able to use a small area to find comps, like a 5-block radius for instance, in a smaller community you need to expand your search because you have a smaller sample from which to draw your comps.
Price-Setting Tip #3: Understand Your Local Real Estate Market
No matter where you are, it is imperative that you get a "feel" for the local market when you are trying to set the price for your home.
• Ask your REALTOR® to provide with information including the average number of days homes are on the market in your area. Focus on the specific price range you are considering for your home to give yourself an idea of how long it might take to sell your home.
• Again, consider whether you are in a large or small market. In a large market, the average time it takes to sell a home varies regularly, whereas a smaller market's sales can be analyzed based on the last year.
Price-Setting Tip #4: Know the Real Estate "Seasons"
There are a couple basic "seasons" you need to be aware of when you are analyzing local data to determine a price for your home.
• Real estate sales are especially busy during late spring, early summer, and early fall.
• Sales drop off around Thanksgiving and Christmas, during the winter, and in the middle of the summer due to vacationing families.
• When the real estate market is slow, you may need to be more aggressive in your pricing strategy in order for buyers to notice your home. The most important thing you can do is price your home in a way that at least brings people in to look at it. The more warm bodies you have viewing your home, the greater chance you have of someone making an offer.
Before you set the asking price for your home, learn all you can about the local comps and real estate market. Knowledge of market trends can really help you cope with some tough decision-making when you are setting your home's price. But the bottom line is that no matter how hard you work to price your home based on market value, you are still at the mercy of your potential buyer. You need someone to fall in love with your house, which is what keeps that air of unpredictability and excitement in real estate.
Justin Renaud is a REALTOR working in the Rolla Missouri Real Estate market. He has been working with buyers and sellers full-time for the last three years. His new website http://www.justinrenaud.com is a resource for buyers, sellers, and homeowners to find helpful advice as well as resources discussing the areas of Rolla, MO and St. James, MO.
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