| A Home Sellers Service From CLHLLC |
YOUR HOMES VALUE
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SETTING A PRICE -- Chris's Way
Chris as your sellers agent will help you set your list price based on several things:
1. Buyers will be comparing your price with everything else on the market. You need to know what buyers have paid for homes like yours in your neighborhood.
2. Your home can be enhanced. You have the option to make certain repairs and improvements that can increase the sale price beyond the cost to you for the enhancements.
3. Is it a Buyers or Sellers market? In a sellers market, you can try to price beyond market value, to see what the response will be. In a buyers market you may need to list at a lower price.
4. Incentives may be considered. Often as a compliment to a price, a seller may offer cash or personal property as an effective way to draw buyers. You may want to include in the listing an offer of a bonus to the selling broker, in addition to their commission.
5. You should be aware of who your buyers will be. If they are at a lower income level, you could offer to pay part or all of their closing costs or discount points required by lenders. You may consider taking back a second mortgage.
6. How much cash do you need from the sale. Once we have a ball park estimate of market value, we can estimate roughly how much cash you will get from the sale. From the estimated sales price, subtract: payoff on the mortgage, your seller's commission, the seller's closing costs such as attorney's fees and various taxes. Then make adjustments to price and incentives etc.
Chris will work with you and guide you, to combine your options and considerations on all of these six factors, to arrive at a list price.
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SETTING A PRICE -- Traditional Way
Appraisal: It is an estimated value of a property, based on a analytical comparison of similar saleable property.
Appraiser: Provides estimated valuation specifically on your house by a professional person. An appraisal will take into account location, condition and sale prices of comparable properties in the neighborhood.
Automated Valuation Model (AVM): These AVM started out in the early 1970s for state and county Assessor's Departments. They are computer programs that use real estate information, such as property characteristics and sales prices, to calculate a value for a specific property. The final valuation can come straight from the computer and be used as the price.
Or this valuation can be used by humans and considered as one of several variables to arrive at the price. This would be computer assisted valuation. For half of Americas homes, there is not adequate computer data to use the first method. The second method must be used allowing humans to fill in the misssing data.
Chris of course is using a computer assisted method. He would have a hard time doing it without the computer. When Chris does his valuation he is using a computer that has extensive computerized data, and he is filling in missing data with his judgements and by actually going to the property to see things.
Even an appraiser will most usually use the computer assisted method, getting data from the computer and then going out to the home. But a lender, once nearly cost Chris $40,000 because they hired an appraiser from Tennessee to appraise our home in North Carolina. He did not use any data from any computer or any where else. He used the constuction price of the home and purchase price of the land 10 years ago and estimated what it would be worth today. His value was about half of its true market value.
MRA (multiple regression analysis) is used to determine how square footage, lot size, age, quality, etc. affect property values. Consequently no AVM is perfect. They all have data problems. Some perform better than others, but all depend on data to get reliable results. None can give results better than the bell shaped mathematical curve generated by the MRA. An AVM in an area with few sales, won't be very reliable.
If the AVM database has no property characteristics for the subject property, it won't be one bit reliable unless it allows user input. Then you are using the computer assisted method. The problem is, for over half of America, these AVM appraisals do not have adequate data, and there is no human intervention - BUT they are passed off as if there was human intervention assistance. The results are wrong but the person using the results thinks they are correct.
Lenders may use AVM mortgage appraisals to speed up the process and reduce costs. But they are just not very reliable. Large lenders use them for second mortgages, refinances and loans, but still rely on humans for a first mortgage appraisal. Today many government agencies use them in differing capacities. (ie. Fannie Mae, Freddie Mac, and County Assessment departments.)
20 things that can alter the value of your home
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