When preparing to sell your house, bear in mind that the value of your house is
not (necessarily):
- what you paid for it plus X% appreciation per year
- what you paid for it plus the cost of your upgrades
- what you paid for it
- the tax assessed value of the property
- what it appraised for a year ago
Here's how I work with homeowners to determine the value of their home...
click image above for printable (and legible) PDFIf you click on the analysis above, you'll see that I am comparing the property being evaluated to a set of recently sold properties and a set of currently available properties. (Or, that's what I was doing at the time --- this analysis is from 2008). The theory is this ---
we can best understand what your property is worth by evaluating it in the context of very similar homes that have recently sold, as well as in the context of what is on the market today.
A few notes about this general market analysis I perform before putting properties on the market:
- In most cases, the homes we're using as comparable properties ("comps") aren't exactly identical to the subject property. Thus, you'll note in the analysis above that I make value adjustments to each comp based on how it is different (better/worse) than the subject property.
- After adjusting each comparable sold (and active) property to bring it closer in line with the subject property, I then average the adjusted values to determine a market value as suggested by sold properties, and a market value as suggested by properties for sale.
- There are some cases where I don't conduct this thorough of an analysis, if there are multiple identical comps. An example of this is a 4-bedroom condo at Hunters Ridge. We don't need to conduct a detailed analysis of the characteristics of each condo that sold or is available --- they are all very similar.
- As a colleague of mine said to me today --- the best pricing strategy today is to be just barely above the highest sold comparable, and to make sure that the price is below the lowest active comparable.
- After conducting the analysis shown above, I typically send a market analysis document to my clients with this spreadsheet as well as the full property details on each sold and active property. We then discuss the entire situation to make sure we are seeing eye to eye on where we should be to price most competitively for the market.
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