Don’t Go In with A Specific Price in Mind
It’s great to establish a price for your home early on after you hire your REALTOR®, but we don’t recommend you go in with a specific price in mind. Instead, it’s important that you work with your agent to review market conditions, recently sold homes in your area, and even evaluate how the condition of your home stacks up with other local listings.
Here are insights you can use as you establish a fair, market-driven price for your property.
How do you determine a home’s true value?
When selling a home, it’s important not to base your listing price on what you paid for the home or how much is left on the mortgage. A home’s true value is what a buyer in today’s market will pay for it.
To determine the right listing price for your property, Edina Realty Realtors evaluate a home by:
- Reviewing its tax-assessed value, keeping in mind that this is often a lagging indicator and not typically reflective of a property’s current value
- Checking how your home compares to recently sold, comparable and nearby properties
- Analyzing how your home’s features, upgrades or condition may improve or lower its value
This unique process is called a comparative market analysis, or CMA. A CMA is the most comprehensive way to assess a home’s value and thereby, its best listing price.
Is a CMA the same as an online estimate?
In recent years, online estimates have popped up all over real estate search sites, and they often set an early tone for buyers and sellers about what a home is worth. However, online estimates are produced via computer-generated models, and they often miss unique attributes and information about a home’s current condition.
For example, if you bought a three-bedroom home 10 years ago but have since added two bedrooms and egress windows to the previously unfinished basement, an online estimate may base the property value off other three-bedroom homes in the area. A Realtor who assesses the home in person would know to price it higher due to the added bedrooms and buyer demand for homes with more finished living space.
To get the best, most accurate assessment of your property, steer clear of automated estimates and make sure that an agent views (and analyzes) your property in person.
What about the values that come from online companies offering to sell my home?
In recent years, “iBuyers” have come into our local market. An iBuyer tends to be a large investment firm that offers automated offers to home sellers, who then bypass the traditional home sale process.
Not surprisingly, iBuyers may not be able to take into account your home’s best features and upgrades; instead, they often operate via automated assessments that are generated through an algorithm. These algorithms base their price analysis (and ensuing offer) off similarly-sized homes that have sold in recent months in your area. If your house is in better condition than those homes, an iBuyer’s automated tools may be unable to see the difference — and they may not compensate you appropriately.
Additionally, iBuyers have to recoup their cost (and risk) somewhere. So while they may boast that they sell your home commission-free, a recent study shows that iBuyers more than make up for it in “convenience fees” and closing costs. In fact, data from that study shows that selling to an iBuyer could cost the seller 2-3 times more than when they sell with a traditional real estate agent who earns a commission.
Why shouldn’t I price my home high, then lower it over time if it doesn’t sell?
It can be tempting to over-price your home and hope to attract a naive buyer, but today’s buyers are savvy, and they set up online search parameters based on typical home prices for the area. By pricing your home too high, you may jeopardize not only the website visits to your listing but also in-person showings where buyers can fall in love with your house.
Last, any seasoned agent will tell you that buyers are wary of homes that stay on the market for long periods of time. Even the best homes begin to look unappealing to buyers who will wonder why such a great home isn’t selling. In short, you’ll risk losing money or the opportunity for a fast closing by pricing your home too high.
Getting started on the home selling process
Setting a price for your property can be tricky, but it’s also a great time to collaborate with a Realtor who can offer expert insights on your home and its condition. Contact the Betty Most Agency to get a complimentary CMA with absolutely no strings attached. View our current properties
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