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Posted By VRSAM on 07-09-2009 04:41 PM
WHAT IS THE MARKET VALUE OF YOUR HOME?
We continually refer to market value and the correct pricing of homes. So just what does “market value” mean and how is it determined? There are several facets of “marketing” to include presentation, timing, and advertising. All of these are important, but without question…and please don’t let anyone convince you to the contrary…the most important aspect of marketing your home, is “Pricing it at or near Market Value.”
To appropriately price your home and thus sell it in an acceptable time frame, it is critical to get past what is understandably the emotional issue of how much your home is worth. There is no doubt that sellers are financially ahead by pricing it correctly the first time, and not eating the mortgage payment (and stress) for several months until they discover the “market value” the hard way.
What Market Value is NOT:
• The assessed value for tax purposes
• How much you paid for your home
• How much you owe for your home
• How much you put into your home, monetarily and / or emotionally
• How much cash you need from your home
• The sales price of your neighbor’s home
• The appraised value of your home when you refinanced last year
“Market Value” for our purposes is: “the price a home will command from a rational purchaser under normal conditions.” It is basic, and irrefutable, supply and demand economics.
A quick note about the numerous on line sites that “tell you what your home is worth.” Ignore them! They generally take data from the public tax assessment records. Assessments are not comparative market analyses, or appraisals! The tax assessor NEVER enters a home. They do not know if a home’s crown molding is gold inlaid or if the home is completely trashed!
Your Realtor should go through several steps to help you determine “a range” for your market value and should not shy away from delivering disappointing information. But they should be able to defend their opinion with facts and analysis.
Generally through their local Multiple Listing Service and specialized software, your Realtor can compare your home to similar model homes in similar “local” developments that sold recently, or are active listings, or under contract. They can also gain extremely valuable information by touring the active listing comparables. They can then fine tune the analysis with the various options and features in the homes. When this information is presented in a tabular format that summarizes the primary features such as lot size, age, bedrooms, baths, etc, a “price range” becomes evident.
The more “recent, comparable” homes in the analysis, the better. A review of the “sold comparables,” where you can know the final sales price, is a strong indication of “current market value” while the “active listing comparables” paint a very clear picture of “the competition” and where the “market value” is headed. Be certain that smart buyers will also view this information and closely consider the competition. The combination of the two analyses will help you to price your home competitively to sell!
In some cases comparables are not easily found. For instance if you are selling your 30 year old contemporary home on three acres in an area that is primarily five year old colonials in defined subdivisions, your analysis may not be as statistically useful. However, any comparisons will be better than a guess! Since the lender’s appraiser will ultimately determine the market value after a contract is written, it may be prudent to pay for an independent appraisal in such circumstances prior to listing your home.
Finally, your home is your investment. Your Realtor should provide this information willingly and be prepared to defend their opinion of a price range.
Consider your Realtor as a member of your team and be engaged in every aspect of home selling, or buying. And when pricing your home, do so with facts and analysis, not emotion.
copyright 2009, all rights reserved by VR SAM |
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RE: WHAT IS THE MARKET VALUE OF YOUR HOME? |
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VRSAM 
Senior Member
Posts:250
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| 07-09-2009 09:41 PM |
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WHAT IS THE MARKET VALUE OF YOUR HOME?
We continually refer to market value and the correct pricing of homes. So just what does “market value” mean and how is it determined? There are several facets of “marketing” to include presentation, timing, and advertising. All of these are important, but without question…and please don’t let anyone convince you to the contrary…the most important aspect of marketing your home, is “Pricing it at or near Market Value.”
To appropriately price your home and thus sell it in an acceptable time frame, it is critical to get past what is understandably the emotional issue of how much your home is worth. There is no doubt that sellers are financially ahead by pricing it correctly the first time, and not eating the mortgage payment (and stress) for several months until they discover the “market value” the hard way.
What Market Value is NOT:
• The assessed value for tax purposes
• How much you paid for your home
• How much you owe for your home
• How much you put into your home, monetarily and / or emotionally
• How much cash you need from your home
• The sales price of your neighbor’s home
• The appraised value of your home when you refinanced last year
“Market Value” for our purposes is: “the price a home will command from a rational purchaser under normal conditions.” It is basic, and irrefutable, supply and demand economics.
A quick note about the numerous on line sites that “tell you what your home is worth.” Ignore them! They generally take data from the public tax assessment records. Assessments are not comparative market analyses, or appraisals! The tax assessor NEVER enters a home. They do not know if a home’s crown molding is gold inlaid or if the home is completely trashed!
Your Realtor should go through several steps to help you determine “a range” for your market value and should not shy away from delivering disappointing information. But they should be able to defend their opinion with facts and analysis.
Generally through their local Multiple Listing Service and specialized software, your Realtor can compare your home to similar model homes in similar “local” developments that sold recently, or are active listings, or under contract. They can also gain extremely valuable information by touring the active listing comparables. They can then fine tune the analysis with the various options and features in the homes. When this information is presented in a tabular format that summarizes the primary features such as lot size, age, bedrooms, baths, etc, a “price range” becomes evident.
The more “recent, comparable” homes in the analysis, the better. A review of the “sold comparables,” where you can know the final sales price, is a strong indication of “current market value” while the “active listing comparables” paint a very clear picture of “the competition” and where the “market value” is headed. Be certain that smart buyers will also view this information and closely consider the competition. The combination of the two analyses will help you to price your home competitively to sell!
In some cases comparables are not easily found. For instance if you are selling your 30 year old contemporary home on three acres in an area that is primarily five year old colonials in defined subdivisions, your analysis may not be as statistically useful. However, any comparisons will be better than a guess! Since the lender’s appraiser will ultimately determine the market value after a contract is written, it may be prudent to pay for an independent appraisal in such circumstances prior to listing your home.
Finally, your home is your investment. Your Realtor should provide this information willingly and be prepared to defend their opinion of a price range.
Consider your Realtor as a member of your team and be engaged in every aspect of home selling, or buying. And when pricing your home, do so with facts and analysis, not emotion.
copyright 2009, all rights reserved by VR SAM |
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Joe Gladden, Captain, USN (retired) Realtor
Managing Partner, VR SAM
Veteran Realty Serving America's Military, Inc.
703 754-3036
homesformilitary@vrsam.com
www.vrsam.com |
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