Determining the price of a house can be very hard. I luckily feel very fortunate because lots of Realtors in my office come and ask me for help, because they know I love the calculations involved in seeing what a house is really worth. It is as much an art as it is a science.
When we first price a house we look at all the comparable properties that are in the area that have sold, that are under contract, or that are active on the market. We try to find properties that are similar in age, square footage, bed and bath, and so on. Some of these things have to fluctuate if it is a unique property or if it is older but we essentially are trying to see if the exact same property were on the market today, what it would sell for.
Location plays a big factor here. Even a mile difference can put a property in another city that has higher home values. When homes are close to a border of another city, we always stay within the city that the home is located in to get the best price.
Condition is also something that can add or take value in homes. If your home is updated, but all the homes around yours aren’t, we still use the other homes as comparable properties, but there will be what we call a bracket. The bracket means that we have the low end of the unrenovated, and the high end of the renovated. When we are pricing a property that has been fully renovated, we want to find at least 2 other properties that have been as well to give us a good idea of value. If you are the first one in your neighborhood to have a full renovation, and no one else around you has, you might not get back the investment that you put in to make those changes.
We also calculate value based off of things that buyers are looking for. Pools, basement apartments, and detached garages don’t necessarily add value to your house, but they do bring a certain buyer that is looking for those things and would be willing to pay a little more for those items. In times these things can bring the value of your property down, but sometimes it helps, there are a lot of factors that go into it all.
After we look at all factors we try and come up with a fair price for you property. One thing that has helped my clients, is because I am a full time Realtor, I have actually seen and been in some of the comparable properties that I am using for my seller and I can help them know how their property really compares to the ones that I have seen.
Once we put the house on the market with our calculated price, we let the buyers and the market tell us if we have priced correctly. If you have no showings within the first weekend, you are priced way too high and you aren’t attracting people to your home. That first week is critical, because you are seen as the new shiny object on the market and if people see that you have dropped your price, they are going to wonder what is wrong with the property. I did some research this morning 5/11/20 and saw that within the past 14 days, 33 homes have dropped their price, and all but 1 went under contract. Dropping your price does let people see your home and spark interest, but you don’t want to waste a month on the market and make extra mortgage payments just to drop your price.
Pricing your house correctly is vital and super important. If you are looking to sell your house and you want me to do this process for you, reach out to me and I’d love to help you.