As real estate agents we always get asked this question. It's an important one. Your home is often your most valuable asset and its important to maximize the net return off the sale when you do sell. Determining how much your home will sell for is not an exact science but we do have many tools at our disposal to help us get close in that estimation. It's important to remember though that realtors do not set the price, the market sets the price. We can estimate the price your home will sell for but if the buyers disagree with us and do not pay it it's because the 'market' has told us that our estimate is off. We can never sell your home 'too low' - if the price we agree to set on your home when we list it is below what buyers would be willing to pay for it then it creates a multiple offer scenario. There are always buyers out there ready to buy - if they see a house priced lower than it could be sold for and is good value for that price then they want to make an offer for your home. When a buyer wants to make an offer then they are emotionally investing in a positive outcome - they want to buy it. If the buyer subsequently finds out via their buyer's agent that there are other offers also being presented to the seller for them to consider then the buyer presents their best offer - often for higher than the listing price. This can be seen in the monthly sales data for Arlington for last month. There are 14 homes (out of 39 reported sales) that sold for either list price or over list price. Most notable of these was 146 Wachusett Ave, Arlington which was listed for $584,000 and sold for $651,000 ($67,000 over asking) or 44 Prospect Ave, Arlington which was listed for $639,000 and sold for $700,000 ($61,000 over asking).
So, even if our estimates for the price your home could sell for are out, the market will offer market value for your home. You will not 'sell it cheap'.
So, how do we come up with that price? It's called a Comparative Market Analysis or a 'CMA'. If you are considering listing your home your realtor should provide you with a CMA - all of the professional realty companies and realtors will provide one when helping you determine the price your home should sell for if it was on the market.
There are several major components of a CMA. They are as follows:
Prior to preparing a CMA a quick visit to your home is recommended. This is to give us an idea of the condition of your home so that we can compare this to other homes that we have sold, or are currently on the market. There are many other details relating to your home that are not easily attainable from public records so a personal visit is always recommended prior to preparing a CMA.
We review the Multiple Listing Service (MLS) for homes similar in size, condition, location and age to yours. The MLS system has records of all properties on the market, from all real estate companies and also includes 'Entry Only' listings (FSBO). Combined with our experience of current market conditions along with data relating to the current listings we can assess which homes on the market are close comparables to your home. This is important information but a key concept is to understand that the homes that are on the market currently are homes that have NOT sold. To market your home at the same price as other homes that are NOT selling is not the best marketing advice we can give you. There is often a reason that they are still on the market and that is because they are priced too high - days on the market is a good data point to request when reviewing these homes. If a home has not sold in around 3 weeks at a price then it is generally listed at too high a price.
We also review the MLS system to identify comparable homes to your home that have gone under agreement in the recent past. This gives us an idea of what is selling although we don't know the price that these homes have sold for until they close. Often we are able to estimate whether they will have sold close to asking price or whether there has potentially been some negotiation in the purchase price based on the days on the market at the final listing price. For example if a home has been on the market for 5 days when it went under agreement you can generally assume that the price it sold for is either close to list price or even above list price. Reviewing Arlington's sales for last month (below) will show several examples of this. On the other hand, if a home has been on the market for 50 days at its listing price and then goes under agreement it is a fairly safe bet that there has been some negotiation of price to have sold the house.
Reviewing MLS for comparable homes to yours that have sold over the last 6 months is the most important guide we have for accurately estimating the price your home should sell for. Key to this is how close the home that sold is to your home, how recent the sale was, and how similar the condition, size, surrounding environment and its curb appeal. More often than not your realtor has personally seen the home while it was on the market which aids in an accurate estimate. Once a home has closed the price it sold for is a matter of public record. This is an important tool in estimating the price your home will sell for. Its not the price that some homes that are on the market now are hoping to get, its what homes have actually gotten for their sale - an important differentiator.
If applicable, and there are comparable homes to yours that have previously been listed for sale but failed to sell at their advertised price then that is important information also.
A key piece of information your realtor should be able to tell you is an assessment of the type of buyer for your home and where they will most probably come from. Not only this but how they will market your home to attract not only the most number of people to view your home, but the most likely buyer of your home.
After reviewing all of the relevant information and considering current market conditions along with seasonal adjustments and assessments of property inventory levels in your town and how this will impact the market over the coming months we can accurately estimate the price you should sell your home for. Most realtors will not 'inflate' this price in order to 'win' your listing by telling you they can obtain higher than market value for your home - beware of these practices - more often than not your home will sit on the market for longer and sell for less than it would have if you had priced it correctly to begin with. The best thing you can say when talking to a realtor about what you can sell your home for is a slight change on the line in the movie Jerry Maguire which is 'Show me the money....' instead, it should be 'Show me the data, then I'll believe you can Show me the money ...'
If you would like an estimate of what your home would sell for in today's market I would be more than happy to come by, have a look at your home, and then provide a CMA (comparative market analysis) which will provide you with an estimate of what your home should sell for, along with a marketing plan to get maximum exposure for your home.
If you'd like to chat more about the topic presented here, or the Real Estate market in general, then please call me on (617) 997 9145, or email me at Dani.Fleming@MAPropertiesOnline.com.