Pricing a home for sale is not nearly as simple as most people think. You can't base the price on what the house down the street sold for. You can't depend on tax assessments. Even automatic valuation methods (AVMs), while useful for a rough estimate of value, are unreliable for purposes of pricing a home for sale.
AVMs like those used by Zillow and Eppraisal, have been used for many years by banks for appraisal purposes. They are derived from algorithms based on past sales. But producers of AVMs agree that they are not accurate indicators of home value. For example, Zillow.com states, "Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for. It is not an appraisal."
So what does Zillow recommend sellers do instead? The same thing the real estate industry has been advising for decades: Ask a real estate agent who knows your neighborhood to provide you with a comparative market analysis.
Here's what I consider when determining the value of your home:
Location
The location of your home will have the biggest impact on how much it can sell for. Identical homes located just blocks apart can fetch significantly different prices based on location - specific conditions unique to each, including: traffic, freeway-access, noise, crime, light, views, parking, neighboring homes, vacant lots, foreclosures, the number of surrounding rentals, access to quality schools, parks, shops, restaurants and other services all affect the value of your home.
Market
Another major factor that also can't be controlled is your local housing market (which can be quite different from the national, state or city housing markets). If there are few other homes on the market in your local area (a situation known as a "seller's market"), you may be able to push your price. However, if there is a surplus of homes like yours for sale (a "buyer's market), your pricing will have to reflect that.
Condition
The majority of buyers are not looking to purchase fixer-uppers, which is why any deferred maintenance and repair issues can also significantly impact the selling price of your home. When your home's condition is different than the average condition of homes in your location your price takes a hit.
Widespread appeal
If you want to sell your home quickly and for the most money (and who doesn't?) you have to make it as appealing as possible to the largest pool of prospective buyers. The more universally attractive your home is, the greater the interest and the faster (and hopefully, competing) offers will come in.
Comparable homes
The only neighboring homes that should be used to estimate the value of your home are those that have been carefully selected by a real estate agent with access to all the information and an in-depth knowledge of your neighborhood.
In this highly competitive and quick-changing market is it critical to be priced correctly. With a comparative market analysis in hand, you can be confident that all of these factors, and more (I can't divulge all my pricing strategies) have been considered, and the recommended sales price for your house is both fair and competitive. Ultimately, this will garner you the highest possible price for your home.
Until next time,
la chasse au bonheur
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