First Steps to Home Selling
“But You Gotta Know the Territory” — and Terminology
Location! Location! Location! is the most crucial consideration in commercial real estate and a major factor, if not the predominant one, in commercial real estate pricing. Likewise, novice (and not-so-novice) home sellers must know the considerations – such as location – that determine a home’s price.
Setting the price at which to sell your home is not a simple formula, nor mathematical. Many elements factor into the decision. A calculated home value is not necessarily what you believe your home is worth. Recognizing this helps avoid overpricing, a major factor that leaves homes languishing or unsold.
Familiarity with the real estate terms market value, appraisal value, and assessed value can save disappointment and frustration, and allow the home seller to more meaningfully engage in setting a home’s listing price.
The most-used definition of market value is “the most probable price a property should bring in a competitive, open market under conditions requisite to a fair sale.” Essentially, this is a pre-negotiation opinion of what a house should bring in its local market, i.e., its geographical area, generally an area such as a suburb or neighborhood.
Appraisal value is an evaluation of a property’s worth at a given point in time that is performed by a professional appraiser. Appraised value is a crucial factor in loan underwriting and determines how much money may be borrowed and under what terms. Ex: the Loan to Value (LTV) ratio is based on the appraised value. Where LTV is greater that 80%, the lender generally will require the borrower to buy mortgage insurance.
Assessed value is the amount local or state government has designated for specific property and frequently differs from market value or appraisal value. This assessed value of real property is not necessarily equal to the property’s market value. Approximately 60% of U.S. properties are assessed higher than their current value; however, this does not reflect what the homes will sell for.
What Is Your Home Worth?
The first step in selling your home is knowing the difference between value, worth, and price. Understanding those factors allows them to be leveraged. There are several ways a home’s value is derived.
Online Home Valuation
A very basic place to start to obtain the market value of a house is at your computer. Note that the assessment is based on available data with no guarantee of accuracy and often uses an algorithm that simply averages comparable sales in the geographic area. These are quick and easy, but don’t answer questions on factors like location and current local trends.
Nothing determines the sale price of a piece of real estate but the price at which it sells. Houses are not the same-priced identical cans of tuna on the grocery store shelf or shares of stock valued and traded every day on the stock exchange.
Real estate appraisal (“property valuation”) is the process of developing an opinion of value for real property. This is the market value – i..e., what a willing reasonable buyer would pay for the property to a willing reasonable seller. Real estate transactions generally require appraisals because they occur infrequently on a given property and every property is different or unique in features and characteristics.
The important factors in a house appraisal are:
- Dwelling type (one-story, two-story, split-level, factory-built)
- Features (including design) – materials used and the kind of structure present and how they were built
- Improvements made
- Comparable sales
- Location – type of neighborhood, zoning areas, proximity to other establishments
- Age of property
Condition, of course, is a crucial factor in valuation. Location is also a factor; however, as a property cannot change location, upgrades or improvements to a residential propriety often can enhance its value.
Current Market Analysis By A Real Estate Professional
This home valuation is free from The Batchelor Hanna Group and more helpful than automated online offerings. It provides detailed information on each house sold in your area over the last six months, along with the final sale price. It also includes the specifics of all the houses for sale in your area, including the asking price. Thes homes are your compettiton. The Batchelor Hanna Group will also answer any questions and help you price your home realistically.
A;long with an understanding of how the worth of a home is determined ,the current market must be considered. By utilizing a proffessional real estate agent (like us), you canrely on proven expertise to market your home at the best listing price.