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UNDERSTANDING THE MARKET VALUE OF YOUR HOME

By Joe and Deb - VR SAM on 3/6/2014

VR SAM® wants to thank everyone who took the time to read and comment on our last article, “Should Military Families Rent or Buy.” This is clearly a front line subject for many military families and we were inundated with excellent questions, critiques and comments on the subject. We made our best effort to respond to each email and thank you for your thoughts! By the way, the goal of these articles is to address areas of interest to you. If you have a particular concern, let VR SAM® know via email. If it is within our expertise and a likely concern to the general military family, we will address your concern in a future article. If you would like to receive VR SAM®’s monthly e-newsletter, just tell us in your email (homesformilitary@vrsam.com) and we will add you to our list.

VR SAM® wants to thank everyone who took the time to read and comment on our last article, “Should Military Families Rent or Buy.” This is clearly a front line subject for many military families and we were inundated with excellent questions, critiques and comments on the subject. We made our best effort to respond to each email and thank you for your thoughts! By the way, the goal of these articles is to address areas of interest to you. If you have a particular concern, let VR SAM® know via email. If it is within our expertise and a likely concern to the general military family, we will address your concern in a future article. If you would like to receive VR SAM®’s monthly e-newsletter, just tell us in your email (homesformilitary@vrsam.com) and we will add you to our list.

 

In many areas of our country, the market has clearly turned in favor of the purchaser, leaving sellers with the stress of “marketing” their home. 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.”

 

We will assume that you have carefully interviewed and selected your Realtor®, and have thoughtfully weighed the decision to sell or rent your home. By the way, you may want to review VR SAM®’s Seller’s Checklist prior to beginning this process.

 

To appropriately price your home and thus sell it in an acceptable time frame, it is critical to get past what is generally, and understandably, the emotional issue of how much your home is worth. After all, we buy our homes because we like them, we decorate them to suit our tastes, we raise our children in them. Our homes truly represent more than the standard commodity.

 

However, the faster sellers get past these issues and focus on the “market value,” the sooner they can move on to your next duty station, and the next phase of your life. And in most cases, sellers are financially ahead by pricing it correctly the first time, and not eating the mortgage payment (not to mention the stress) for several months until they discover the “market value” the hard way.

 

So before we define “market value” it is helpful specify what it isn’t. 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 supply and demand economics. As home inventories increase, home prices will fall. If home inventories decrease, home prices will climb.

 

Your carefully chosen Realtor® should go through several steps to help you determine “a range” for your market value. By the way, probably the hardest thing for a Realtor® to do is to tell a client that their home is not worth as much monetarily as the client believes. Good Realtors® will not shy away from this uncomfortable responsibility, even if it costs them the listing! But they should be able to defend their opinion with facts and analysis.

 

In most cases, through their Multiple Listing Service and specialized software, your Realtor® can compare your home to similar model homes in similar “local” developments that sold recently, are active listings, or under contract. 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. Note that the review of the “sold comparables,” where you can compare the list price with the final sales price, will tell you more about the market price. The “active listing comparables” tell you a little about market price, but will paint a very clear picture of “the competition.” Be certain that smart buyers will consider the competition. The combination of the two analysis should help you to price your home competitively to sell!

 

It should be noted that 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 and all analysis will be better than a guess!

 

Finally, your home is your investment. Your Realtor® should provide this information willingly and be prepared to defend their opinion of a price range.

 

In summary, VR SAM® recommends:

  • “Consider your Realtor® as a member of your team.

  • Be engaged in every aspect of home selling, or buying.

  • When pricing you home, do so with facts and analysis, not emotion.” 

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