Asking a seller evaluate their home’s value is like asking a parent to evaluate the attractiveness of their child. In other words, a seller has too much bias to accurately determine the value of their home when getting ready to list it for sale. Luckily, that’s where we come in.
Correctly pricing your home leads to fewer days on the market, less disruption to your life, and the maximum price. Each new listing creates a buzz in the local real estate community, and the right price will attract more buyers to your home. When a home is priced in line with recent sales data, interested buyers recognize its value and submit offers near the list price. This puts the seller in control and possibly in the position to receive multiple bids, driving up the price.
While we understand some sellers’ desire to test the market with a higher price and other sellers’ fear of leaving money on the table, it’s necessary to price it correctly from the beginning. A listing has the most exposure and buyer interest in the first 3-4 weeks, which means this is the window that gives you the best opportunity to get the highest possible sales price. You don’t want your home to sit on the market and become a “stale” listing, forcing delayed price reductions and giving buyers more control over the sales price.
To recommend the right list price, we employ the same detailed approach as an appraiser. We pour over the recent sales and present you with a customized Comparative Market Analysis (not a standardized report generated from the MLS) that considers the nuances of neighborhoods, streets, and homes. We review the information with you and, together, we decide the most effective list price.
A lot of factors go into determining the correct price for your home. Here are a few the things we take into consideration.
First and foremost, your home’s value is based on its location. Different neighborhoods hold different values – and even where your home is positioned within the neighborhood can sometimes matter. (For example, a large lot in the back of a neighborhood will be worth more than the corner lot near the main road.) A neighborhood’s value is based on lots of things as well, like its crime rate, proximity to schools and hospitals, the neighboring school system’s rating and other amenities like parks.
2. Your Home’s Age
Your home’s age is also a factor in its appraisal value. A newer home isn’t necessarily always appraised higher than an older home as there are advantages (and disadvantages) to both. Newer homes (built within the last 10-20 years) are less likely to have major issues, so they are a lower risk to buy – which increases the appraisal value. However, older homes that are located in historic districts or have been well maintained for decades will also have a high appraisal.
3. Construction Materials & Updates
What construction materials were used to build your home’s foundation? A house built more recently (or recently updated) with modern materials will hold a higher value than a home that hasn’t been updated since it was originally built decades ago. Other big updates like roofing, siding or windows can also add to your home appraisal value because they improve the overall efficiency and safety of the structure of the home.
4. Curb Appeal
Another factor that impacts the home appraisal value? Curb appeal and general landscaping. A home with no or little curb appeal can lower the overall value. Conversely, a yard filled with plants and dead trees that are hard to maintain can also have a negative effect on value. If you’re looking to sell, the best option landscaping that’s clean, minimal and easy to care for in order to entice most buyers and increase your home’s value.
5. Design Style
The overall design of your home is also evaluated to determine your home appraisal value. Some timeless home designs will not affect the long-term value of your home. However, if you chose trendy decor and finishes that are now no longer in style, your home could be appraised at a lower value because it might not appeal to all buyers. If you’re consider making updates and think you’ll want to list your home before long, your best bet is to opt for decor and finishes that age well, versus those that are fads right now.
6. Square Footage
The overall square footage of your home is also evaluated as part of the home appraisal value. Then, once that number is determined, the appraiser will take into consideration how that space is distributed throughout the home. How much of your square footage is useable and livable space, versus home much is “dead space”? How many stories does your home have? How your home is laid out has an impact on your home’s value.
7. Number of Bedrooms & Bathrooms
The number of bedrooms and bathrooms in your home will also increase your home appraisal value. Home appraisers will compare your home to other homes in the area with the same number of bedrooms and bathrooms to make a value comparison.
8. Heat & Air
The type of heat and air your home has will also be a factor in your home appraisal value. Central air is appraised higher than homes that require room by room air conditioning units. In addition, how your heat is fueled (electric, gas or oil) will also be taken into consideration. Any outdated systems will lower the appraisal value of your home.
9. Garage & Storage Space
Garage and storage space also make a difference in your home’s appraisal value. The size of the garage (or if the home has a garage at all) will also contribute to the home appraisal value. In general, where a home buyer is able to park their cars will influence the appraisal value. And when it comes to storage space, a home that has an ample amount of large closets, a useable basement and a large attic for storage will be appraised at a higher value than homes with little to no closet space or other areas for storage. Many home buyers looking to upsize are typically looking for more storage, so do what you can to maximize this space prior to listing.
10. Recent Renovations
Newly updated kitchens and bathrooms hold a lot of value to buyers, so an appraiser will take recent renovations into consideration when determining the value of your home. If you’re consider making big renovations before putting your home on the market, choosing high impact areas of your home could have large returns on the appraisal value of your home.
11. The Current Real Estate Market
Finally, the current real estate market has a large impact on how your home is appraised. Homes appraised during a “sellers’ market,” or a market that’s saturated with a ton of buyers and not enough inventory to accommodate all of them, will be appraised higher. On the other hand, your home appraisal value during a “buyers’ market,” or a market that’s saturated with a ton of homes and little buyers, will be appraised lower.
At Corbett & Co., we strongly believe that it has become even more important to price your home correctly in the current market. While the general perception is that it’s a strong sellers’ market, buyers are shrewd – and their sensitivity to value (i.e., not overpaying) is acute. It’s clear to buyers and agents when a seller is reaching for a price. As a result, many sellers are being caught in a situation in which they overpriced their home, and now they are chasing the market with price reductions. There have been 98 price reductions in the last two days in Indianapolis alone. You only have one chance at a first impression, so make sure you have the data to support your price!