Knowing the Value of Your Home

A comparative market analysis (CMA) provides you with the data you need to determine the market value of your property and price it appropriately. When you list your home at the right price, the benefits can be substantial for both you and your prospective buyer. A well-priced home often sells quickly and for a price that’s closer to your original listing price.

Get the facts first

There’s no substitute for the kind of useful information a CMA can bring. It includes active listings for comparable homes in your area, and their locations. It also features such important details as square footage, lot size, date built, the number of bedrooms and baths, amenities, updates and more. This kind of information ensures that you’re comparing “apples to apples.” A CMA lists pending sales and houses sold in your area in the past six months, along with their actual sale prices.

By comparing your home to similar homes in your neighborhood and reviewing their list prices as well as their actual selling prices, I can help you arrive at a fact-based assessment of your home’s market price.

Price it right and reap the rewards faster

When you base your pricing strategy on the market conditions at the time you put your home up for sale, you have a better chance of selling it quickly. Price your home appropriately from the outset and you can maximize the chances of reaching the most qualified buyers. The fact is, a home receives its best exposure during the first three to five weeks on the market. Multiple listing service statistics confirm that the more time a home spends on the market, the more its price drops.

As a recent National Association of Realtors study shows in the chart below, the longer a home is on the market, the greater the difference between the original listing price and the actual sale price. For homes on the market less than one week, the median price was 100 percent of the listing price; 58 percent of homes sold at the listing price. For homes that were on the market 17 weeks or more, the median sales price was 90 percent of the listing price, and only 4 percent sold at listing price.

Not only does the difference between list price and selling price grow the longer a house remains on the market, so does the number of times the price is reduced. Overall, 40 percent of sellers noted that they did not reduce their asking price, while 26 percent reduced it once. For homes on the market two weeks or less, 78 percent did not reduce the asking price. For homes on the market 17 weeks or more, 26 percent reduced the price twice.

Good prices attract better prospects

For most people, their home is the single most valuable investment they have. You don’t want to price your home too low, but it’s essential that you get the best possible price. Remember that prospective buyers who look at your listing are looking at other listings similar to yours. You want to make sure that your price isn’t so high that they cross your house off the list.

It’s important to understand that agents are reluctant to show an overpriced home, since their clients depend on them to find them the best possible value in a house. If your house is overpriced, an agent will know it and the only reason they’ll have for showing it is to make a competing property look like a better value.

Talk it over with a pro

Although a CMA can offer you a great deal of important data, my localized knowledge of your neighborhood can prove invaluable. For example, I am likely to be aware of coming changes, such as plans for a new library or park in your area, that can directly affect the value of your home. In the end, pricing your property is both an art and a science. As an agent, I have the experience to offer both.

Are you considering a big home-improvement project or a remodel? If you plan to sell, the right improvements can make your home more enticing to buyers, reduce its time on the market, and increase its sale price. If you’ll be staying in your home awhile, the right project can make your home immediately more livable and functional while increasing its value over time. In either case, you want to ensure a return on your investment, and these guidelines will help you do just that.

Know the “cost versus value” for specific projects

What types of home improvements are most likely to give you a good return on your investment in your geographic area? Remodeling magazine’s annual Cost vs. Value Report is an essential resource for anyone considering a major project. The free, comprehensive report is available online at Remodeling Magazine. A few clicks will show you approximately how much you can expect to spend on a particular project in your city or region, and which specific improvements are most apt to recoup your costs. It’s interesting to note that certain projects are fairly safe bets for recapturing your investment regardless of where you live: replacing windows and siding, adding a wood deck, and minor kitchen and bath remodels. But you might want to think twice before adding a sunroom or remodeling a home office; the report reveals that these projects will probably earn you the least amount back on your investment.

If you’re selling ...

When preparing to sell, it’s generally safest to invest in exterior improvements, especially those that improve your home’s curb appeal. This might mean adding new landscaping in the front yard or shoring up a sagging front porch and giving it a fresh coat of paint and some welcoming details like colorful potted plants. And while it’s not very exciting to replace an old roof, forlorn siding or drafty windows, these essential improvements pay off quite reliably.

If you’re thinking of putting your house on the market, a no-risk, zero-cost first step is to consult your Windermere agent, who can recommend some specific improvements that will appeal to buyers in your area while providing you the best return on your investment.

If you’re staying ...

If you have no plans to sell, your primary concern is that your home is beautiful, comfortable and functional for you. You don’t need to immediately recapture your home-improvement investments, but prudent choices will ensure that you’ll recoup your costs over time. In an older home, adding a bathroom to the master bedroom is a great example of an improvement that makes your home immediately more livable, and that will more than pay for itself at sale time. Also ensure that any improvements offer flexibility for you or future owners. For example, a state-of-the-art home office might be essential for you now, but down the road that space might serve as an extra bedroom for an aging parent. Keep the room flexible by using furniture that can be easily moved, rather than built-in custom cabinetry.

Do be sure that any renovations have broad appeal. For example, finishing a basement to add living space can be a money-smart investment if it’s a daylight basement with plenty of natural light. But a dark, closed-in space won’t be appealing to your family members, let alone future buyers.

Respect the integrity of your home’s original design

“Every agent has walked through an open house that boasts a newly remodeled something, but it doesn’t fit the rest of the house,” says Maggie, a Windermere agent. “You feel terrible for the seller, because they’ve wasted a lot of money.” She adds, “If you’re selling a little 1940s house in a desirable old neighborhood, prospective buyers aren’t expecting to see anything sleek or ultramodern. They’re looking for cozy, clean and charming. Now, if there was originally no bathroom on the second floor and you added one, that’s obviously a big plus—especially if its aesthetics complement the rest of the house.”

Keep in step with your neighborhood

The real estate commandment, “Thou shalt not overbuild,” has never been truer. Some homeowners sink too much money into improvements and then, in an attempt to recapture their costs when selling, price themselves out of their market. (If you own one of the priciest homes in your modest neighborhood and want to sell, your potential buyers are probably looking in a more expensive area.) On the other hand, it’s smart to keep your home’s features competitive with those of surrounding homes. Find the right balance with some advice from your Windermere agent, who can give you a specific bull’s-eye for your neighborhood.

Small changes bring a big payoff

When Tom and Nicole were preparing to sell their two-bedroom home and look for something bigger to accommodate their growing family, they nearly made a costly mistake: “We had convinced ourselves we needed to completely redo the kitchen before we could sell,” Nicole admits. “But our Windermere agent, David, and a few of his colleagues did a walk-through, and they said ‘no way’ to a kitchen remodel.”

Nicole adds, “Instead, they recommended a few improvements. We replaced our kitchen sink and faucet with something very attractive and practical. We replaced our ancient dishwasher, and we updated a few light fixtures. Tom’s dad volunteered the labor, so our costs were just under $1,200.”

“On the other hand,” adds Tom, “I guess we’d gotten used to our main bathroom, but David and his group immediately pegged that as a problem area. So we replaced a small pedestal sink with a new vanity unit that had lots of storage, and we removed the rickety sliding door on the tub and replaced it with a shower rod and curtain. Those changes cost less than $700, and boy, what a difference.”

Tom concludes, “We’re not real estate pros, and we didn’t have an objective view of our house. The smartest thing we did was to accept some free counsel from experts who know our market. We did exactly what they recommended—which included lots of little jobs that kept us busy for a few weeks. The house sold in 22 days at our asking price, which, in our area, is pretty amazing.”