We’re going to continue our look at the price of your home now. As we mentioned in our first hour, it can be really difficult to answer the question – ‘what’s my house worth.’ Especially when you’re selling it….because that whole process finds different numbers attached to your house, at different times.
Just to recap – There’s the CMA – the comparative market analysis….which gives you a really accurate estimate, about how much your house could sell for right now in today’s market.
That usually leads to the list price…..the one you hope someone will pay.
Next – the price of offer. What a buyer is willing to pay.
Then…..If buyer and seller have meeting of the minds? The price they agree to becomes the contract price.
Next there’s the appraised value…what the appraiser will tell the bank the house is worth.
And finally….there’s the sales price. The actual amount the house sold for….the gold standard. The most accurate number out there, in determining price.
OK, now that’s a lot. But I have to tell you….there are more prices also associated with your house. Some are legit, some are not.
Let’s start with the ones that are, in fact, legit.
The tax assessment is one. Many homeowners look at that figure when the tax bill arrives every year….and think, well, that’s what my house is worth! Well, that’s fine, but….the assessed value of your home…the number you see on your tax bill… could be an entirely different number., than the actual market value of your house.
The assessed value is what your local government uses, to figure out how much property tax you’ll pay. Now in most cases they don’t base the amount of tax you pay on the full market value of your home. Typically it’s more like 70, 80 or 90% of its market value. So in most cases your home will be worth more – possibly a lot more – than the value you see on your tax bill.
OK. So now let’s look at some of the other ways people determine value….ways that aren’t very accurate at all.
One, is something we’ve all done from time to time.
And that is, adding up your purchase price, and the cost of the improvements you’ve made.
Many of us do just that. If we buy a home for $300,000 and then they put in 50? We figure that home’s now worth 350,000 when we sell. Well, the math is good but the market may not agree…because most Home Improvements return a percentage of their cost but not 100% of their cost. A common approach, but not very accurate.
Also, basing your home’s value on what you need. We all do that too. Saying, I want to clear enough money when we sell, to put down a hundred thousand on our next house. Again, we all do it. But the market will decide what your profit will be – not what you need – on that next house.
Now there’s one more approach, that believe it or not, happens a lot. And that is? What the neighbor says. Seriously! If you’re out working on your yard and The Neighbor comes by and says you know, your house looks good! I bet you could get four or $500,000 for that house. Well, you would be amazed how many homeowners latch onto that figure and never let it go. So nothing against your neighbor, but if you really want to know the value of your home you will use hard market-driven data. What sold, and what did not sell. The data your REALTOR® can provide you. Because in today’s market houses that are priced correctly tend to move fast. And houses that are priced incorrectly? Quite often the for sale sign goes up stays up for a long time. Longer than the other houses in the neighborhood. So don’t be that house. Don’t be the one that just won’t sell. Be the one that sells fast. The longer it takes to sell your place, the longer you’ll have to keep paying its mortgage, Insurance, taxes utilities….and on and on.
So again if you really want to answer the question ‘what’s my house worth?’ Get the facts. Get a comparative market analysis from your REALTOR®. Based on current market activity. After all, it’s probably your biggest investment….might as wll know exactly – how much ‘ya got!