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Email Post to a Friend: Behind the Scenes of Determining Home Value

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February
22

Determining Home Value - Laffey Real Estate

At Laffey Real Estate, our real estate agents work hard to get you to closing quickly and easily. If you're getting ready to sell your home, one of the most important parts of that process is also one of the earliest: Setting an asking price. What does it really mean if a home is "priced to sell?" It means you are getting the best deal possible aligned with your local market – and thus, attracting highly qualified buyers.

Ideally, a home is on the market for 30 days or less. Warning lights flash as it climbs toward 60 days. Pricing a property correctly is essential to that timeframe. It protects you against leaving money on the table but also against the wasted time and aggravation of a listing that lingers. If a home cannot be sold in 90 days, it often has to be relisted later. This spells disaster for sellers!

It's fair to ask: How does a real estate agent price a home?

Pricing a Home to Sell Means Using Comparative Analysis

A comparative analysis is the formal process of using the latest market data to formulate the ideal price for a given property at a given time. This helps real estate agents and their clients avoid the pitfalls of overestimating how much a home could be worth – an easy mistake to make when it has great sentimental value.

Here's how it works:

  1. Gathering Recent Sales Data
    To perform a comparative analysis, the agent first needs home sales data from the last 90 days. Local housing market trends can change very quickly, so focusing on the last 90 days ensures you are still dealing with broadly similar conditions – buyer interest, availability of financing, and so on.

  2. Drilling to the Zip Code Level
    The agent needs to find 5-7 comparable homes ("comps") to have enough pricing data. That starts by looking at recently sold homes in your zip code. Zip codes can have substantial differences in taxes, school districts, and much more. But if communities are similar, sales data from neighboring zip codes may be useful as well.

  3. Comparing the Amenities
    After price, the first thing any prospective buyer looks at is the number of bedrooms and bathrooms a home has. No two properties are truly comparable if they don't line up on the basics. The real estate agent also needs to calculate the price impact of any noteworthy features, such as an outdoor deck or swimming pool.

  4. Including the Acreage
    Land is not a major differentiator in urban markets, but it gets more and more vital in suburban and rural areas. In communities where homes may sit on multiple acres of land, the real estate agent must draw on experience to know buyers' expectations and use that knowledge to make appropriate comparisons.

  5. Completing the Analysis
    Once enough comps are found, the agent completes the analysis by averaging out a sales price for the home to be listed. Because the price is based on recent, accurate, comparable data, it is much more likely to result in a successful sale than a "best-guess" estimate would.

Pricing your home is a crucial part of reaching your goals as a seller, so be sure it's always done right. Our experts have the experience you need to succeed. Contact us at Laffey Real Estate to learn more or get started.

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