Friday, October 16, 2015

Apples and Oranges: How To Price A House

Most people think that pricing a house is a long and mysterious process. 

Since everyone likes to think their house is unique, they tend to believe that any comparison is like the proverbial apples and oranges – when they have a lush ripe pineapple!

Some other people think that to price a home all they need to do is look on Zillow. The real estate website giant offers a Zestimate as soon as an address is entered. 

This is a great way to start because it will show you what information is public about your house.

What most people don’t know is that Zillow can be very inaccurate when it comes to price. People in the real estate industry rarely rely on this resource for pricing information. What they sometimes use Zillow for is to see the pictures of the interior.

So how can the average person get an idea of their house can sell for?

The same way as the pros!

Comparables


There is a process called “comparables”. During this process a person looks at houses in the neighborhood, and draws a comparison from information on houses in the area. Realtors use the MLS for current and sold listings, but you can use several websites to get a cross section of this information. There are three basic categories of what is reviewed.



What houses are for sale

This is an indication of what your competition will be when you put your house up for sale. It usually consists of houses in your neighborhood, subdivision or street. The number of houses is both good and bad. If there are a lot of houses for sale, you can have a good idea of what your house may be worth. Conversely, it also means that you have a lot of competition. If there aren’t a lot of houses, then it is harder to get a comparison, but may be easier to sell.

What houses are like yours


Of all the houses for sale, it is important to select the properties that have the most similar features to yours. Normally three to five houses are a good number for comparison.

What this means is finding the houses that have the same number of rooms, the same number of floors, similar construction and exterior space. If you have a garage or swimming pool, the best comparables will too. If there are features that your house doesn’t have, the best comparables will not have these features either.

If there aren’t three to five of these houses on the market, then there are calculations that can be made. It is possible to average the price for a square foot and multiply by the number of square feet in your house. There are other calculations as well. For example, a swimming pool is typically worth $10,000 - $15,000. If you don’t have one, but the comparable does, then that amount is subtracted from their asking price to give you an idea of what you can ask for. Similar calculations are available for green spaces, busy streets and renovations.

What houses have sold for


Undoubtedly the best information comes from houses that have already sold. The reason for this is that a person can ask for any amount for their house. What is important is what a buyer will actually pay!

Typically houses in this category have sold within the past three months. Any older than that and the market conditions may have been too different for comparison. Think back to the housing crisis of 2007. Any person selling today wouldn’t want to be compared to those prices – even if it is the same house!

If there aren’t enough nearby houses that have recently sold, then houses that are further away will need to be reviewed. It is important to remember that the further away a sold house is from yours, the less accurate the comparison will be.

Why is that?

Amenities


Amenities are the desirable features of a neighborhood. Typically it refers to services and recreation in the area near a house. Proximity to shopping, parks and transportation access are a few considerations.



Coming up with your asking price


Once all the available information is collected, it is time to choose the three to five houses that are the most similar to yours. Using the photos from Zillow, or other sites, you can eliminate anything that is too different on the outside or the interior.

Objectively consider the final selection. Compare any renovations or upgrades including style trends and materials used. Determine where your house sits between these others. Is it the best, worst or just average? That will tell you if you are at the high end midpoint or low end of the price range.

Remember though, that the asking price is just a beginning point for negotiations. If priced right, those negotiations should start happening in a few weeks. If not priced competitively, your house may sit on the market for a long time.





If you are putting your home on the market yourself, the pricing process can be a very stressful time.  In addition, if selling during the holidays isn't something you wish to consider right now, we can help.


If you have come to the realization that it is time to move right now to have a better life, but your house isn’t ready for market, we can help. 

If you are juggling too many responsibilities to sell your house yourself this fall, then there are people who specialize in the sale of properties "as is" - usually within a week to resolve the situation quickly. 

Contact us for details.

Next time we will look at how to fix up your house before a sale.


So thanks for reading my post. I'm so glad you're here! 

And I really look forward to getting into more great stuff in future posts -- so that you can 

Turn Your House To $OLD!



Feel free to ask me any questions through the contact info below. I would be very happy to help.


Linda  623-335-2662







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Article Sources:

Lynda Bathory