It’s one of the more common questions homeowners ask me. There are several steps to determine your home’s value on the current market, and the process is multifaceted.
The process is called a comparative market analysis, and for this blog entry I’ll refer to it as a CMA.
Often I have to explain why my CMA differs from the simple “estimates” one sees on the popular real estate websites.
So I thought it might be helpful to potential sellers for me to explain a little further the process for determining the value of a property going on the market. Hopefully, by learning more about the CMA process, you’ll better understand why you should never trust the “estimates” you find online.
But before I go into those details I should start by acknowledging that when a seller chooses to put their home on the market, the listing price is ultimately the seller’s decision.
In listing your home on the market, I have to appreciate the various personal and intrinsic factors that are driving you to sell your home.
A CMA is an effective tool to help guide a client in their decision-making process, but it is only a tool. I trust my CMAs and encourage my clients to examine them thoroughly, but I work on behalf of my clients and the listing price is ultimately their decision.
Once I’ve provided a CMA with a recommendation for a fair market value price, my clients and I work together on choosing a listing price that the sellers are comfortable with.
When it comes to determining your home’s value on the current market, seeing the property is the first thing. Getting my eyes on the condition of the home is the most important part of the process.
The specific details of your home, the conditions and maintenance both inside and out, among many other factors make a CMA a complex and nuanced process.
This is the reason why the “estimated” prices you see online are often unreliable. The process is far too involved to simply rely on one algorithm.
When I’m walking through a potential seller’s house, I’m looking at obvious things like square-footage, number of bedrooms and bathrooms and the size of the yard and look of the neighborhood.
But I’m also interested in a constellation of other details that can play an important role in determining your home’s value.
These include any recent updates or remodels since the home was previously purchased, the style of the house (I.E. colonial, ranch, split-level, townhouse, etc), any additional spaces like a garage or workshop or studio, among other factors.
Well-known websites take only simple attributes like size and amount of bedrooms and bathrooms to throw an appealing price at you.
But outdated bathrooms, worn paint and tired kitchen cabinets will lower your home’s true value. Conversely, well-maintained homes with appealing room colors and kitchen appliances can help increase the amount of money you can get for your property.
Walking through a home, I’m able to assess these conditions. (This is also a great opportunity for me to see areas my client might be able to work on to help improve the home’s market price). I am always happy to provide a list of suggestions…
Having an idea of the home’s condition, size and demographics, I can start to find comparable homes that have sold recently. Comparable homes are located in or around your neighborhood or town and usually have similar attributes to your home and are in a similar condition.
This sounds like an easy process. But many houses are unique and offer difficult queries for finding similar homes. Not to worry, though. Homes like these require an even more discerning inquiry into recent home sales.
With the appropriate comps (our term for comparable homes), I’m able to embed the information into my CMA software, which helps me determine a home’s potential value on the current market.
I offer my clients a comprehensive CMA that shows them recent homes that have sold in their area. I like to go through the CMA with them to help them understand it in order for them to make a sound decision on a listing price.
Although going on to popular real estate websites and looking up your property and seeing its estimated value is easy and painless, I hope from learning more about the process of building a CMA, you’re able to see how misleading these so-called “estimates” can be.
Without seeing a property, assessing its condition, knowing the current local market trends, factoring in recent changes and appreciating the details of the home, an agent or website cannot accurately estimate its true value on the current market.
Only a diligent and experienced real estate agent has the tools and insight to assess the value of your home accurately in order for you to determine whether or not it’s worth selling.
An accurate listing price means a quicker and easier home selling process! If you’re interested in seeing what your home is worth in today’s market, feel free to contact me for a free and painless CMA.