The first part of selling your home is to conduct a real estate market analysis. If you are considering selling your home, you may have an idea for what you want to list it for. Most homeowners expect people to pay top-dollar for their house, or at least more than they paid for it. But, you shouldn’t guess at a price. It’s important to take your subjective belief and adjust it with an objective insight.
A real estate market analysis, also known as a comparative market analysis, is how you do it.
It looks at the values of other homes in the area compared to the house that you plan to sell. This way you won’t undervalue or over-list your home which can limit your profit or number of interested prospects.
Follow these steps to better understand the housing situation of an area so you can list your home for a competitive price.
Analyze the Property
Before you can compare the value of homes in your area, you need to know about your own home. The property analysis will look at:
- The square footage of the house
- Lot size
- Home age
- Number of bedrooms
- Number of floors
- Any notable improvements.
This assessment will determine whether your house is worth more or less compared to others in the area.
For example, if your home has a new roof and solar panels, then it may be worth more than other houses that are in worse shape. However, if it is the only house on the street without water access or without a pool, then it could be worth less.
As you can see, there are several factors that need to be taken into account when assessing your property – each with its own weight and value. There are just as many factors that contribute to the real estate market analysis of other homes.
Look for Comparables and Conduct Property Value Estimates
The next step in conducting a real estate marketing analysis is to look at similar properties that have sold and what they are going for.
For example, a Realtor® might consider other condos within a single complex to see what the average price is for each of the units. This gives them a ballpark range for the lowest and highest prices in the neighborhood.
Your Realtor® will also look for comparables, or houses within the neighborhood that have similar features and are of a similar size. Using the condo example again, a Realtor® will pay attention to units with the same number of bedrooms and square footage, and specifically those with similar appliances and upgrades.
The market determines what a home is worth. Regardless of what you paid for the property two, five, or ten years ago, you need to list your home within the range of what other houses or units are selling for.
Assess the Home in Person
Even the best real estate market analysis can be inaccurate without an in-person home visit. There is a lot that you can understand with data, but there are still knowledge gaps that you miss without actually seeing a property.
For example, while the home itself may be in good condition, there could be issues limiting its ability to sell. The home’s placement next to an interstate, weather damage, the lingering smell of cigarette smoke, and dirty conditions all create challenges for Realtors®. The space will either need to be cleaned, repaired, or staged, or the seller will need to adjust their price.
This home visit also allows a Realtor® to talk with a seller to see how motivated they are. A homeowner might accept a lower listing price if it means selling the house quickly.
Determine a Listing Price
With all of this information, your Realtor® should be able to choose a fair listing price for your home. This is based on the expected value and the going rate for other properties in the area.
Keep in mind that your listing price likely will not be your selling price.
Unless you are in a highly-competitive market where buyers are entering bidding wars, you are likely to get lower offers and will enter into negotiations with potential buyers. Knowing how much leeway you have with your pricing strategy is one factor in determining how quickly your home sells.
Recommended Reading: 7 Ways to Increase Home Value Before You Sell
Ask Your Realtor® About Their Real Estate Market Analysis
Most Realtors® have an established system to conduct a real estate market analysis around a home. They automatically review a home’s value compared to other houses in the area.
As you look to find and hire a Realtor®, ask them about their analysis process and what they would consider listing your home for. They can tell you the factors they take into consideration when choosing a listing price.
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