By Danny Smith
Real estate prices have recently increased dramatically. In Alexandria, the average sale price this month is about 6% higher than it was last month. Nationwide, home values appreciated about 17% last year.
Do you want to know what your home is worth? The true but generic answer is easy. Your home is worth the price that you, as a willing seller, would accept from a willing buyer – an adequate answer if you have an acceptable offer in hand. If you’re not so fortunate, then you may want to quantify what you would be willing to accept. A family’s residence is typically its most valuable asset, so reliable quantification is prudent.
Lenders usually hire a licensed appraiser to provide a professional opinion of real estate value, but that can be expensive. Here are a few thoughts on how you could prepare a reasonable estimate of your home’s value. In a perfect world, there would be a nearby home that is identical to yours and recently sold, otherwise known as a comparable sale or comp. Assuming that the sale occurred recently, within about six months, you would have a useful measure of your home’s value.
However, nearby comps are typically different. You must then examine the differences and adjust your home value to account for those differences. It is important to identify the significant factors affecting value and make adjustments to account for the differences.
Among the important factors are the number of bedrooms; number of bathrooms; total finished square feet; other rooms, e.g., library, study or formal dining room; off street parking; exterior materials, fireplaces; recent remodeling or scenic views. Location is important but not likely a factor here as you are making comparisons to nearby sales.
Appraisers have developed systems for adjustment of prices to account for the differences. A similar system often used by real estate agents is the comparative market analysis or CMA. One way you can adjust differences yourself is to research how much it might cost to replicate in your home the positive features that exist in the comp.
What you have accomplished so far will provide some indication of how much your residence is worth. Now, suppose you have received a promotion in a distant city and must move there by a certain date. It may be prudent to set your asking price lower to promote a timely sale. Time constraints should be considered in establishing an asking price likely to yield a timely sale.
Another important timing consideration is the yearly real estate cycles. Spring is a good time to place your home on the market. There are more buyers and the weather is more conducive to visiting homes. There is also a smaller peak in late summer and early fall before the holidays approach.
Return on the sale of your home is enhanced by making many potential buyers aware that your house is for sale. If you chose to sell your own home, begin with a yard sign. Tell your friends, run ads in the newspaper and post your property on Facebook, Instagram and other social media platforms. These are some of the many marketing tools used by real estate professionals.
Preparing your home for sale is important for obtaining an acceptable price within a reasonable time. The minimum preparation basics are cleaning, decluttering, depersonalizing and paint touch up.
You know the term “curb appeal.” Pay special attention to the exterior of your home. You don’t want a potential buyer to drive away without even looking inside. One of the easiest and most cost effective exterior improvements is mulching. Mulched flower beds, paths and borders around trees and shrubs are easy, inexpensive and almost shout “professional landscaping.” A green, mowed and edged lawn will also yield returns in your offers.
A more problematic type of preparation is expensive remodeling and updating. Today’s buyers are typically attracted to move-in ready properties, but there are also those who want to make changes so their new home will feel like it is theirs. Careful analysis and advice from an experienced realtor are highly advisable for such undertakings.
There are additional aspects of a home sale to be considered, such as the influence of mortgage rates; absorption rates, or homes available versus homes sold in a given period; year-over-year sales volume and prices and appreciation. These items are complex and are best left to professionals who devote their careers to tracking and forecasting them.
However, even the experts find them intractable sometimes. At the beginning of this year, the consensus forecast for mortgage rates was that they would reach about 3.5% by mid-April. In fact, the rates blew through that level well before mid-April exceeding 5% on April 13.
There are professionals who specialize in all of the disciplines touched on in this article, and you may choose to seek their advice. Your specific finances, risk tolerance, time constraints and other factors are likely different from those of every other homeowner. The common denominator for all homeowners should be recognizing and addressing at least the most significant considerations. Whatever your preference, now is a good time to sell. We are definitely experiencing a seller’s market.
The writer is a realtor with TTR Sotheby’s International Realty, a registered professional engineer, chair of the Historic Alexandria Resources Commission and intensely interested in Alexandria’s historic architecture.