Market Value – What is my home worth?
When selling a home, the most common question asked if how much is my home worth? Nobody wants to lose money in any financial transaction and everyone wants to make money. Real estate is no different. However, real estate markets can and do fluctuate and money can be made or lost within the same market. It is very important to understand the market value of your home in a specific market and to understand how this value can be increased or decreased.
Just about everyone at one time or another asks this very important question. The market value of your home is the price that your home is reasonably expected to realize after adequate time and exposure to the real estate market.
As a seller, knowing the market value of your home is important. Not all sellers list at or near market value. When they do not, they run several risks.
List price too low?
When the list price is too low, a seller runs the risk of not getting what their home is worth. When the list price is too high several things can happen. It is also worth knowing that when a seller lists slightly below the market, they may get multiple offers in some markets and some circumstances. When this happens, it is possible to sell at a price above list price.
List price too high?
When the list price is way too high, a seller may not get any showings. When the list price is high but not too high, the seller may get showings but no offers. When the list price is at or near market price, the seller should get offers (assuming that the home is prepared and presented effectively).
It is important to understand that market price is based on a specific market and the conditions within the market. A specific home may have one market price in a sellers market and another, different, price in a buyers market. When the list price of a home is based on market price, the list price will be adjusted for a specific type of market and the conditions within the market.
The determination of market price is both an art and a science. For this reason, market price is generally given in terms of a range of prices. As with many other things in life, it is possible for a real estate selling agent to determine the market price of a home with minimum work. A competent real estate agent will generally spend a fair bit of time reviewing the market and the conditions within the market as well as the condition and features of the home before rendering a market assessment.
As a seller, if a real estate agent provides you with a market assessment without first having seen your home, be wary. Two homes can look exactly the same on paper but they can be quite different when viewed in person. Market assessment done properly can require a fair bit of work on the part of the person doing them. Similarly, if a real estate agent provides you with a market value that is well above those provided by other agents you should also be wary. This is referred to as “buying a listing” and the agent will likely try to talk you down in price after obtaining the listing so that the home will actually sell. List at what price should be a question that comes into your mind under these circumstances.
A final point to be made concerning the agent role. It is possible for a home to be listed at or near market value, and is some circumstances not to receive any offers. What a specific seller believes are selling features of their home may not be shared by a number of buyers.