What is my home worth?
This is a question we receive daily in our business and the right answer is, "in whose opinion?"
Ultimately, it is the Buyer, the Seller, and the Appraiser that determine the value--what is one willing to pay, the other willing to accept, and the bank willing to loan against? However, coupled with that are other valuable considerations that aren't reflected in the recorded sale price, such as Seller Concessions and repairs. I'm of the opinion, that everyone should have a good idea of their Market Value, just as they know the value of their 401K. Computer-generated values are available on Zillow and Trulia, however the owner of this company (they recently merged) even admits they can be as much as 10% off the value. Real estate is local. And when determining value for a future sale, the following must be understood.
The Seller Determines the List Price
After receiving a list of recent comparable sales, and making adjustments for features such as age, size, quality, and condition, a Seller determines the price at which they want to market their home. Receiving reliable information in this regard is a substantial determinant at how successful that Seller will be in reaching their goal of selling. Some factors in the Seller's Pricing Strategy are how quickly they want to sell, how much they owe on their mortgage, and how many repairs they are willing to do. In my years of doing business, I have heard the accusation that a real estate agent "bought" a listing by telling a Seller that their home is worth more than it is. While the practice does exist in the industry, a professional agent will educate their client by using adjustments that are typical of a professional appraiser to eliminate unrealistic expectations and wasted time on the market. When that Seller chooses their Pricing Strategy, the Agent may then determines whether they want to accept the listing. Is it worth the marketing expenses to list an overpriced property? Sometimes that home might not sell, but they will pick up Buyers and make up the lost expenses by selling another home to that Buyer. First and foremost, Realtors have an ethical and contractual obligation to their Seller Client (next week's blog post). An Agent also might be trying to assist the Seller in avoiding a Short Sale by making every effort to find the one buyer willing to pay that asking price.
The Buyer Determines the Sale Price
Until a Buyer is willing to spend their hard-earned money on one of the largest investments of their life, a sale will not occur, therefore that buyer has to be convinced of the value of the home for them. Perhaps the Buyer needs some assistance with closing costs or debt payoff and the terms of the agreement provide for more value to them. There are many factors included in the terms of an Agreement that aren't outlined in public records. All sales are not considered equal!
The Appraiser Determines the Market Value
Despite a Buyer and Seller agreeing on a price, most Buyers today are going to finance their purchase with a mortgage. After the Buyer makes their loan application, an Appraiser is hired by the mortgage company to confirm the value of the property. While the Real Estate Agent will provide you with the details of past sales, pending sales, and current competition and inventory, the Appraiser is looking only at closed sales. He or she ultimately answers to the Underwriter of the loan and has to use very specific criteria to justify the opinion of value. If current inventory is low, and there is a higher demand for a home, the price will rise. However, the Appraiser, going by closed sales alone, may have the opinion that the home is worth less. The bank will only loan against that Appraiser's opinion of value. At this point, the Buyer and Seller must negotiate the difference. It is important that the Buyer and Seller are aware of the possibility of appraisal problems to avoid surprises and wasting time and money. As the housing market has improved, and with the bubble still in recent memory, appraisal "differences" are not uncommon today.
The Agent Provides You With The Tools To Make The Best Decision For YOU!
Knowing what your home is worth is as important as checking your savings accounts and investment portfolios. I'm happy to provide an opinion of current market value at any time. If your request to know value is with the intent of a sale in the near future, I will want to review your motivation to sell, your abilities to provide concessions and do repairs, and your timeline to sell. At our appointment, I will review the factors involved in determining your Pricing Strategy and my Marketing Proposal to help you reach that goal of Selling. After a thorough review of the current competition and most recent sale prices and Terms, I will provide my recommended price. Then the Seller sets their Price and the marketing begins! For a current opinion of market value, contact me today.