Some properties can be trickier to price than others. For every challenge that makes pricing more difficult – whether it’s the age, location, special features, or the ever-changing market – there are solutions to help you narrow down a fair value.
1. A lack of comparable properties nearby
“Comps” refer to nearby homes that sold within the last 3-6 months and are similar to yours based on a number of criteria, like size, age, condition, and location. In a comparative market analysis (CMA), an agent will gather this information in order to determine a range of values to help them price your home.
Now, this can be difficult when dealing with a rural country estate or luxury homes that bear no resemblance to their neighbors’ homes. It can also be difficult when there aren’t as many similar & recently sold homes to compare your property to.
So what are your options for determining a fair market value in this case?
Expand the pool of comps by location or time frame
It’s ideal if comps come from a defined neighborhood, but when that option isn’t available, your agent may have to use a larger radius. The nearest comp could be miles away in rural areas, but it will at least provide a baseline to work with. Or, your agent may extend the time frame back to 6-12 months to find comparable properties.
Get a pre-listing appraisal
In the cases of outliers or unique homes, it may be best to get a pre-listing appraisal. That way, you can start with a number provided by a professional appraiser and test it on the market.
2. Your home is in a unique position or location
Appraisers take into account the age of the home, the condition of its essential parts (like the roof), the size of the lot, and many other factors. But, there are also factors that can impact value instead of helping it – especially in terms of location and positioning.
If your home is built near water, the views could be exceptional, but there could also be a risk of flooding that could negatively impact the value. Homes that back up to freeways, railroad tracks, or airports face issues when trying to determine a price. In this case, the best thing to do is:
Bring in a professional appraiser
By getting an appraisal before listing your home, you lower the chance of overpricing your home and having it sit on the market for months.
3. Your home isn’t like any others nearby
If your home is significantly different, older, or newer than the others in your neighborhood, comps can give you a good idea of a range to price your home. But, nailing down the exact number can be a challenge.
Your agent can use the multiple listing service (MLS) to look at homes that are similar to yours. This can be especially helpful for historic properties or properties with specific features.
4. Your local market is fluctuating
If your local market is volatile or fluctuating, that’s a separate problem that can make it challenging to price your home. Fluctuating markets mean that even recent comps may not accurately reflect your home’s current value.
If the market is going up, properties that sold 6 months ago may have gone for a much lower price than what they would be worth today. And vice versa – if prices are falling, your home’s comps could have sold for more than your home is worth today. So how do you find accurate comps in a fluctuating market?
Look at only the most recent comps
Narrowing the window to homes sold in the past few weeks (or past month) can help prevent the use of older comps that no longer reflect the current market trends.
Have back up for your home’s sale price
In the event that your home becomes the center of a bidding war that drives up the price, you’ll want to take every step to maximize your home’s appraised value. Have proof of upgrades or renovations, like receipts for new appliances, a new roof, or HVAC installations.
Enlist the help of an agent
Enlist the help of a real estate agent to guide you through the process and make sure that you are in the best position possible.
Team Melton has over 50 combined years of real estate experience to assist you through every step of the process. Contact us today to get started on selling your home!