When I am setting a price for your home, I will run a market analysis to determine this amount. Through my MLS (multiple listing service) I look at:
1. Active. This will give me an idea of what your competition is. I will look at the houses that are similar to yours and determine how competitive you need to be. When buyers are looking at your home, they will most likely be looking at these available homes as well. How does yours compare in location, price and condition?
2. In contract. These homes are not directly in competition with you but they are not yet sold either. By the time that yours is sold, they will hopefully be closed and be able to provide us with additional comparable. I just need to see if there are any that will help us or hurt us.
3. Closed (Sold). These are the most important because these are the same numbers that an appraiser will be looking at when determining the final value of your home. I would look for homes that are as close to yours in square footage, number of bedrooms & bathrooms, basement size / finished or not, garage size and basic updates. An appraiser will not use details of updates (such as yours has ceramic and a comparable has linoleum flooring) to increase the value. The appraiser will report a final value of your home to the bank of the buyer…and that will be the maximum amount they will be able to get a loan for.
Why does this matter?
If you have overpriced your home based on Market Value, it doesn't matter if a buyer has offered to pay a higher amount. If an appraiser gives a lesser amount as their appraisal, the buyer will only be able to secure a loan for the appraised value. (For example: Your home is listed for $200,000. A buyer has made an offer for $200,000. Homes in the area have only been selling for $180,000. The appraiser gives a value of your home at $180,000. The buyer will only be able to get a loan for $180,000. They would have to either bring $20,000 cash to the closing to complete the deal or you would have to lower the price or the deal would die.) To not be put into this position, it is best to price your home right the first time.
You could look on websites like Trulia and Zillow to try and determine these values on your own. The problem is that these websites are not always accurate or up-to-date. As an agent, I would use the MLS (multiple listing service) to find out this information and discuss it with you. My information is updated daily and the same information that local appraisers will look at when they are doing their job. Often times I actually provide these numbers to the appraiser so that they can see what we used to accurately price your home.
Would you like a FREE Market Analysis with no obligation? Give me a call today!