The real estate market is constantly changing. In a relatively short amount of time, real estate values have dramatically increased and drastically decreased. Also, the devastating impact of foreclosures and short sales should not be underestimated. In CENTURY 21 S.G.R., we follow a step by step process in assessing the value of your home.
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For more information about price analysis, please see below for a description of our step by step process.
Step One: Why are you selling?
Is this an optional move or a mandated one? The Rubicon with respect to delineating this question is whether you could remain in your home, rent it, or must cash out to make the required move.
It is important for you to answer this question because there is not simply “a” price for your property but a pricing continuum which is a derivative of time and marketing services. This nexus influencing price will be addressed in the following steps.
Step Two: Price as a derivative of time
Each neighborhood and property type within a neighborhood have a historic appreciation rate that can be expressed in multiple segments of time: months, semi-annually, annually, five years, ten years, etc. There is no guarantee that a historic pattern will extend into the present or future. But to ignore consistent historical trends in favor of unsupported conjecture is not a wise move. Therefore, we are forced to look cautiously at the past for present guidance. If you can wait four months, it is logical and historically accurate to conclude that you can price your property higher and receive a greater net dollar amount than if 30 days were your outside selling imperative.
Step Three: Defining a Price Range:
As stated in step 2 – there is not a single price for a property. If a person “must” sell in 30 days or less, there is one range. If a person has 90-180 days to sell, there is a second range. If a seller’s time horizon extends beyond 180 days, it is best to wait and keep the property off the market until the seller’s time horizon has collapsed to within 180 days or less. It is not in a seller’s interest to expose a property to the market too long. Such a property often times becomes stigmatized by the realtor community, and realizes less money, not more.
Step Four: Talking To A Brokerage Firm
Before you talk to any brokerage firm, it is critical that you have a general idea what your property is worth. Information about pricing can be gleaned from an array of
sources: sold prices reported in local newspapers; the assessor’s office; local realtors’ newsletters; neighbors; open houses. It is critical that you are informed so that you
can evaluate the integrity and usefulness of the information a realtor presents to you.
In pricing your property – it is important that you see it through a buyer’s eyes. What a buyer is normally paying for is a property type, in a specific location, consisting of so many square feet, in an ascertainable condition. By far the location of the property is the most significant factor affecting its value. Neighborhoods rise in value – not individual properties. Next in pricing importance comes physical size and then condition. When a realtor presents his “comps”, properties similar to yours in the broad areas defined above, it is important to question him about the validity of these comps. Are the comps within the true boundaries of your neighborhood? Are they physically the same or quite similar in size? Are they finished equal to, inferior to, or superior to your home? Are there any ancillary factors, such as lot size, zoning, quality of construction, or terms and conditions of sale that should be factored into the equation to truly arrive at the proper pricing equation?
Step Five: How to Hire the Right Firm; price as a derivative of marketing services
During the initial brokerage interview, it is critical to get a written guarantee from the agent and his firm about the marketing system they will employ that is independently verifiable by you. The marketing services performed in a systematic, repetitive fashion will strongly affect the price you eventually get for your property.
As noted before, price must be viewed as a continuum. Every property has at least two major prices: wholesale and retail. Wholesale represents what an investor would pay for your property in cash today. Retail is the price a buyer will pay if fully informed about and given adequate time to see the properties that could fulfill her needs.
It is important to remember that there is not one buyer for your property but potentially many. The brokerage firm you hire must get information about your property to as many of these potential buyers as quickly as possible. Within the retail price range there are at least three values: low, medium, and high fair market value. How many of these potential buyers a brokerage agency can reach with information about your property, along with time, will determine which one of these retail values you will receive.