Squeezing Liquid Gold From Bricks And Mortar
When you sell your home you tend to have your heart set on getting the highest possible value in return for your precious asset. As the occupant and owner there is an emotional bond that causes homeowners to have clouded vision when it is time to put a selling price on the beloved land and improvements we call home.
Homes are not a liquid asset: That simply means that it takes some doing in each individual case to convert a home into the equivalent amount of cash. That is why there is a well-developed profession of real estate agency and brokerage in every state.
In all, realtors do a good job of creating a free and open market in real estate, a market that is governed almost entirely by the economic forces of supply and demand. Therefore here is a primer in the main method used to reach that price: The comparable sales method of valuation.
There are many ways to determine the value of a high value asset such as real estate. In residential real estate sales the most effective method is to look to the records of the marketplace and compare the qualities of the property to yours and estimate the equivalent value on the open market.
This works best because it depends on real-world prices that have actually been paid from buyers to sellers. The trick lies in determining what is actually an equivalent real estate holding.
The Difference Is In The Done Deal
The first thing to be aware of in comparable sales is the difference between what people wish to get for a property versus the value at which homes actually change hands. You can find the differences on the Web at sites like Trulia.com and Zillow.com. Remember to set search parameters to view actual past sales and not listing prices.
Comparables Mean Characteristics
When you compare the price of homes you do so on the basis of the similarity of characteristics. For example, you get no comparison from looking at sale prices of detached five-bedroom split-level homes if you are analyzing a three-bedroom townhouse. You need to match similar type and age properties that have comparable number of rooms and square footage, with similar lot features located as nearby as possible.
Changing Time And Shifting Value
As we all know, real estate prices change over time. So you want to look at the most recent completed sales to eliminate the changes in market levels as much as possible.
See For Yourself
When you find sold homes that appear to be alike to the one you intend to sell take a drive around to them yourself and try to get a good look at them. You will be able to make a visual determination as to whether they are actually a close comparison to your home.
Notice What Moves And What Does Not
As you watch the market over a period of weeks and months you will start to see patterns of differences between listing prices and sold prices. Also there will be those properties that stay on the market for extended periods.
Even in a slow real estate market, properties that are priced right for the market and condition will sell fairly quickly, i.e., within days of listing. The difference is entirely based on price: If it is the right price for the prevailing market conditions it will sell; if not the price is simple too high for the market to bear.