Determining Your Home's Value

by Jeff Leiser, Paradox Home and Garden

Determining your home's value, and setting a price, is
probably the most important step in selling your home. Why?
Because if your home is overpriced for your area, no matter
what the cost of improvements that you have made on your
house, buyers will shy away from it.

On the other hand, an underpriced home will probably move on
and off the market because of a quick sale, but there goes
your profit. So, to avoid losing time and money, you must
properly price and present your home.

1) The easiest way to determine your home's value is to pay
for an appraisal, and price your home close to the appraisal
price. You can find Residential Fee Appraisers listed in the
Yellow Pages under Appraisers. For about two to three
hundred dollars, they will give you a by-unit (room to room,
fixtures, amenities; and square footage) comparison
appraisal to similar property in your area. The downside is
it will cost you money, but the upside is that you have in
writing a professional appraisal on your home which you can
display to prospective buyers. This can be an added selling
feature. But there are other methods you can use, which
won't cost you anything.

2) Another way to find out the value of your home is to
interview three or four real estate agents in your area. Of
course, you will need to decide whether you want to use a
realtor, or whether you want to go "for sale by owner." If
you use a realtor, he or she can help you determine your
home's value, and the best asking price to set. But you may
find yourself saying, "Gee, if I sell my house myself, I can
save thousands of dollars in realtor commissions." If you
would like to go it alone, you can find advice on How To
Sell Your House in Six Easy Steps at
http://www.paradoxpro.com/prdx.hosale.html

If and when you contact a realtor, talk to an agent
directly. Let him or her know up front if your intention is
to sell your home yourself. You can always use the agent
anyway if you also intend to buy a home, since an agent's
services are free to the buyer. Usually you can get an agent
to provide a bit of information about your current home, as
long is there is some commission in it somewhere.

Ask the realtor for a CMA (Comparative Market Analysis) on
your house. You will need to supply the agent with
information pertaining to your house and the area. List the
number of baths and bedrooms, and the total number of rooms.
Do not count the basement, garage or bath areas as rooms.

Next make a list of up to 10 roads within a half mile to
mile radius. Include your address, zip code and school
district. This furnishes the agent with all the criteria
necessary to run a market analysis. A CMA consists of the
selling prices of the homes in the surrounding area that
have similar traits to your house. The comparable should
cover a six-month to one-year period.

Some web sites offer to provide a CMA. Many of them are
based on tax rolls, and often charge for the service. At one
time, there were several sites that allowed you to access
the information anonymously, but a recent check of over 100
sites in a leading search engine showed that today's sites
require you to provide either money, personal information,
or both.

3) A third method of figuring your house's value is to
determine what your city or county has set the value at,
based on your property taxes. Let's say the property taxes
on your house are $2000 a year and your tax base is 1
percent (this is a percentage in which local municipalities
multiply their estimate of the worth of your home to arrive
at a yearly tax figure). The city or county in which you
live uses many methods to determine what they feel is the
worth of your home. To determine this estimated value, you
need to multiply your base by the yearly tax amount. Usually
the value, your tax base, and the yearly property tax amount
are located on the same issued tax statement or bill.
$2000.00 x .01 = $200, 000.00 YOUR TAX BASE OF ONE PERCENT
(.01) MULTIPLIED BY YOUR YEARLY TAX OF TWO THOUSAND DOLLARS
($2000.00) = ESTIMATED VALUE OF YOUR HOUSE, OR $200, 000.00.

The problem with this method is that there have been great
fluctuations in tax valuations in the past 20 years, and
your property taxes may or may not be a good way to estimate
your home's value. Often it is best to try each of the three
methods, as a way to check each of the other methods for
accuracy.

Even the realtor's conditional CMA may not be on the money.
This is where a comparison between the information given to
you by the real estate agent and the calculated value of
your home may help.

Let's say the agent tells you $310,000 is the average selling price
in your area for a house with similar square footage and features.
Another important factor is how long the houses stayed on the
market before selling. A complete CMA will include a brief
description of each comparable home and the days on the
market before it sold.

Use the comparables to price your home, but if the market is fair
in your area (90 to 120 days on the market) deduct 2%, and for a
poor market (120 days or more), subtract 3%. Market movement
is important. Likewise, if the houses move really fast, you may be
able to set your price slightly higher. You want a starting price high
enough to make the profit you want, but not so high as to scare off buyers.

Be aware that none of the suggested ways of determining your
property's worth referred to in this text will guarantee the
house will sell for your calculated price. The marketplace
is always the final word in regard to actual profit you can
expect and the speed at which your home will sell.

******
Jeffrey D. Leiser is the author of "You Can Sell Your House:
For Sale By Owner" which includes 10 forms and a 60 page guide,
plus a bonus report on salesmanship. Sell Your House in Six
Easy Steps, http://www.paradoxpro.com/prdx.hosale.html

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