What's my Capitol Hill home worth?
It's part science and part art . . .
Who Really Sets the Price?
What's your home worth? . . . as the saying goes it is "whatever you can get for it". This may be true, but any homeowner wanting to sell his home is going to want to know what price it should sell for. You may already know what price you would ask for your home, and you may be right. But chances are that as a biased home owner (as we all are) your value may not be in keeping with the current market for your neighborhood. This is where you need the unbiased opinion of a professional . . . us! Well, maybe you had someone else in mind, but we would be happy to help you. After all, that's why we're here.
Putting a value on your home is done through the process of a "Comparative Market Analysis" or "CMA".
Generally this involves having a real estate agent research the last 6 months sales in the immedate area of your home and comparing the sales price of the most comparable homes. This is not as easy as it sounds. There are many factors that come into play, but the most closely looked at will be:
- Location
- Views
- Sq feet of lot
- Zoning of the lot
- Sq feet of home
- Number of bedrooms
- Number of bathrooms
- Condition of home
- Age of home
- Features of home
- Architectural style of the home
- Parking
In a perfect world you would find 3 recent sales in your neighborhood that are similar in all ways and they all sold for the same price. This is just not reality so this is where the art of pricing comes in.
What you can do is take a look at the differences in the most comparable homes and make allowances for those differences. This should get you close to the current market value. These differences are judgement calls which is why you often get different values from any number of realtors. Any homeowner wants to hear the highest number possible and may choose to work with the agent who will provide the highest number. This can be very dangerous, particularly if you have several prices that are similar, and one that is excessively high. For more about this tactic you may want to read "the high cost of overpricing".
Many people are now turning to the internet to get an "instant" value for their home. This may get you close, but often times the home valuation tools can be off by as much as 15% (Zillow values my home at 13% higher than I just paid for it!). Be cautious when looking at Zillow numbers. The formula relies heavily on tax records and other secret formulas (voodoo) and will not take in to account current condition of the home, any recent upgrades, or the fact that the once amazing views have just been blocked by new construction townhomes.
Most homeowners have a price in mind for their home. But to close let's just say that as a rule, this is how pricing is established:
- The homeowner has a price that he wants for the home.
- The real estate community has a price at which they believe it will sell.
- Ultimately it is the buyers, by use of their checkbooks, that are the ones that really set the price.
