Last Updated on March 25, 2022 by Luke Feldbrugge
If you’re looking to sell your home, there’s probably one question in your mind that stands out above all others: “What is my house worth?” Finding the answer to this question can be more difficult than you might think. You can always try and work out a rough figure from understanding what work will need doing to the house once it’s been sold. There are a ton of factors that impact a home’s value, and some are easier to measure than others. Every seller wants to get top dollar for their home, and many people overestimate the value due to wishful thinking and the emotional connection they have with the home. But to determine the true value, you need to step back and be as objective as possible. Here’s how to separate facts from emotion and figure out exactly how much your house is worth.
Importance of Determining Home Value
Pricing your home accurately is extremely important. If you price it too high, you may scare buyers off, and if your home sits on the market for too long, it could develop a bad reputation. In the end, you may end up getting less than if you had priced it well originally. On the other hand, if you price it too low, you obviously run the risk of getting less money than you deserve, or buyers might assume there’s something wrong with the house and stay away.
It may seem tempting to list at a high price in hopes that someone is willing to pay it. Who knows what can happen, right? But unless you’re in an extremely hot market, this approach can backfire in a hurry, deterring buyers and preventing a sale. Also, a bank will only issue a mortgage loan for the appraised value. So even if someone is willing to pay the higher price, the bank’s reluctance could cause the deal to fall through. The best solution is to list at a reasonable price based on your home’s objective value and make sure your home is ready to sell.
What is a Comparative Market Analysis (CMA)?
To figure out what your house is worth, you need to conduct a comparative market analysis (CMA). Essentially, a CMA looks at all the factors that can impact your home’s value. This includes an in-depth analysis of your home (square footage, features, location, etc.) as well as comparable homes in the area (recent sales, homes with similar features, similar size, etc.). Your real estate agent will be able to handle most of the CMA for you, and many sellers hire a professional appraiser to get an independent view of their home’s value. But it still helps to know how the process works and what goes into figuring out what your house is worth.
The first step in conducting your CMA is to assess the neighborhood in which you live. You obviously know how you feel about the neighborhood, but you need to look at the objective measures and statistics that buyers will be using to decide if they’re interested in buying your house. In your assessment, concentrate on things like the crime rate, the quality of the school district, proximity to attractive locations such as parks and shopping, as well as proximity to unattractive locations such as garbage dumps or major highways. Try to see your neighborhood through a buyer’s eyes. This can help you identify your home’s value as well as top features to include in your listing.
Evaluate Similar Homes
A major part of the CMA process is looking at homes in the neighborhood that are similar to yours. To do this, consider looking at the estimated home values listed on sites like Zillow. This can give you a good starting point. You’ll also want to look at what homes sold for recently in the area. But make sure the sales are recent or the information won’t be accurate. Real estate markets can change quickly and it’s likely the situation today is much different than it was 10 years ago.
Focus your search on homes that are similar to yours, but don’t go by price per square foot alone. Every home is unique, and the value will ultimately be determined by the home’s features. A smaller home with a renovated kitchen, hardwood floors and a great backyard pool will likely sell for more than a larger home in need of repairs and renovations. Try to get as much information as you can about recent sales and use that to decide how much your house is worth.
Determine Home Value
Once you have all the information from your CMA, you should be able to determine your home’s value. However, that doesn’t mean that will be your listing price. Your agent should discuss a pricing strategy with you. Depending on the market, your agent may suggest listing at a slightly lower price to generate more interest and hopefully start a bidding war. Your agent will know what kind of price the market will tolerate, and they can guide you on any listing decisions.
Finding the answer to the question, “What is my house worth?” takes some work. But by putting in the time and conducting a thorough CMA, you’ll have the information you need to price your home correctly and sell it as quickly as possible.
Ready to start working with a real estate agent who can help you determine your home’s value? Register with Homes for Heroes today. There’s no obligation and you’ll be automatically matched with a real estate specialist in your area. They’ll be your dedicated partner throughout the home selling process so you can put as much money as possible in your pocket.