How to answer your question about house worth is really quite simple. You
could hire an appraisal company that specializes in home appraisals and pay a flat fee for their service. But keep in mind that it's
just a considered opinion. An appraised house value does not necessarily
equate with fair market value. Check out this page for further details regarding answering your question about house worth.
Or you could interview a few local realty agents and tell them you plan to sell your home and need to have some idea of house worth. Agents are normally quite happy to offer an opinion. Averaging their various opinions may provide a reasonable estimate of fair market value. To be fair, though, you should inform each of them up front that they're competing. Also advise them if you intend to first try a private sale.
They're experts at determining house worth. Each agent may prepare an extensive and detailed Comparative Market Analysis (CMA) to answer your question. They may accept the task and not charge a ...
Or they may not want to compete. Ask if there will be a charge for their work. Some may levy a flat fee which, if you list with them within a certain period of time, they may deduct from any future commission earned from the sale of your house. Make sure you get this in writing. This methodology might work or it might not since they may opine high about house worth in the hopes of convincing you to list with them.
Or to answer your question, based on neighbourhood rumour and your local real estate newspaper, you just ...
By definition, market value is the highest price estimated in terms of money which a property will bring if exposed for sale on the open market, allowing a reasonable time to locate a buyer who will purchase with the knowledge of all the uses to which the property is capable of being used.
Wow! That was technical. In other words, to accurately come up with an answer to your question about house worth, to determine its fair market value, you must ...
To decide on a list price is also quite simple, provided of course, you have access to accurate and current information on comparable properties that have recently been listed for sale, sold or expired. And provided you have considerable experience in evaluating homes objectively so as to have the ability to provide an educated guess.
The more accumulated knowledge and experience the guesser possesses, the more accurate will be their estimate of house worth, commonly referred to as market value.
A qualified real estate agent, familiar with the local market, will have a general idea of the value of your property before they step inside for an inspection. They'll already know the price range for your neighbourhood. When they appear at your front door, they're beginning to refine their general opinion based on what they see, smell or hear.
For example, if the front lawn is in rough condition or the walkway is cracked and in need of repair or the garage door is dented with peeling paint or the front entrance is unwelcoming with chipped paint and a broken screen door, they make a negative monetary adjustment in their mental calculations.
They step inside to a beautiful foyer with a fantastic mosaic tile floor, warm gum wood paneling and etched glass French doors to the formal dining room, then suddenly, their opinion of house worth goes up. Okay - they're thinking you're not 'outside' people. But inspecting the basement brings another negative adjustment when they find dampness and mold. Down it goes again. Oh, but look at this gourmet kitchen with Brazilian granite counter-tops, warm cherry cabinetry, high-end stainless appliances and porcelain floors. Up it goes again.
Anyway, I'm sure you get the idea. The ability of an experienced realty agent to objectively view your property and honestly apply their knowledge in the final analysis is where they justify a very large portion of their ultimate fee for service.
If you like percentages, how about 40% of the fee is earned at this point, another 40% during negotiations of the offer(s) and the remaining 20% with, well, everything else.
Once the inspection is completed, everybody sits down at the kitchen table to allow the agent to present their report. It may take the form of a sophisticated computerized graphic presentation, or simply a binder with colour graphs, testimonial letters or print-outs of comparable current and sold listings in your neighbourhood.
During my career, I personally preferred to postpone offering an opinion right away. I typically felt it was better to show the homeowners how I arrived at my conclusion. Then, it wasn't just an opinion, but a solid justification. And I never pulled any punches. To answer your question about house worth, any good agent will provide detailed information and a professional considered opinion of your home. They'll tell you what you ...
In other words, a good agent will not 'buy' the listing by suggesting an unrealistically high estimate with the intent to convince the seller to list with them, only to call the seller a few short weeks later asking for a price reduction.
The figure I normally provided was not a specific amount, but a tight range. Evaluating real estate is an inaccurate science at the best of times. Thus, I suggested that to provide a specific figure is opening the door to possible disappointment and bad feelings later. I explained that anything could occur in an open market. I also prepared my sellers for the future possibility of having to adjust the list price downward.
When a good real estate agent provides this range, it's not for the list price. It's a hoped for sale price. The conversation about the list price came next. Once you established an agreed expected sale price range, then move on to the next discussion regarding ...
There are two schools of thought here - list high and be prepared to reduce the price if there's no interest , and yet again if there's buyer interest, but no offers. This is the traditional method. Countless numbers of this type of listing fail to sell due to an unrealistic list price and a corresponding unreasonably long market exposure period.
Buyers often not only refuse to view or offer on properties that they and their buyer agents feel are over-priced, but also show no interest in listings of properties that have been on the market for a long time, even at a price that might have generated a sale if originally listed at that price. They suspect either serious defects in the home or unreasonable sellers. They tell themselves that nobody else wants it, so ...
This method fails to take advantage of the most active period of any listing - the first couple of weeks. At any given time, in most active markets, there's a pool of buyers scouring the new listing inventory. They've already viewed and rejected existing stock and are just looking for new listings. When a property that might suit their needs appears, but is not priced competitively, they ignore it. However, if the asking price is fair, they contact their buyer agent or the listing agent to arrange a viewing.
If you decide to ignore your agent's advice or you're given poor advice in the first place, your over-priced listing will generate little if any activity. Obviously, the best way to get sold is to ...
Set the list price fairly close to the hoped for sale price. You'll not sell your property without buyers viewing it. Choose the right bait - a fair price.
Sometimes, a real estate agent will suggest deliberately under-pricing your property and delaying the presentation of any offers. This strategy can prove highly effective for the right type of home in the right neighbourhood in the right seller's market. The plan is to generate a competition wherein multiple buyers bid on your home. Each buyer and their agent is kept unaware of the contents of the competing offers, hence making it a blind bid situation. When successfully undertaken, properties often sell well over the asking price.
Happy day for
the seller, but certainly not for the buyers. This marketing method
obviously makes it virtually impossible to answer in advance your
question regarding house worth because it could be much higher than anyone could have imagined.
The risk in this
scenario is if only one buyer makes an offer. You could end up either
selling at a lower price or having to raise the list price. And the latter can
discourage future showing activity. To learn more about this protocol from a buyer's perspective, click here.
Hire a good realty agent to establish home market value and place your trust in them. To read more about the advantages of hiring a good agent and answering your question about house worth, visit the Canadian Real Estate Association (CREA) or its counter-part in your country. You can also explore the website of The Toronto Real Estate Board to answer other questions.
If you're considering selling your house - with or without an agent - check out my book The Happy Agent. Learn how to effectively evaluate your home, how to prepare it for market, including basic staging and renovations to enhance its value, how to advertise, how to handle showings and open houses like a pro, how to successfully negotiate an offer - and when it's time to throw in the towel and hire a professional.
When you consider the huge potential
real estate commission, the investment of a pittance of your time and
money could prove quite worthwhile. At the very least, you'll be
encouraged to try it alone. Remember - knowledge is power.
Available virtually everywhere print and e-books are sold.
A must-read for anyone contemplating a realty career and the perfect antidote for agents seeking a more productive, less stressful direction for their own realty business.
It’s also designed as an insightful resource for home buyers and sellers curious about the ins and outs of buying and selling real estate.
"An inspiring and candid tale of one man's journey to success as a real estate agent and achieving inner freedom. This book is sure to ignite the passion and holds the key to unlocking the power that lies within us all." Gina Ceci, Real Estate Lawyer