Your estimated home value is a combination of the value of your house, your neighborhood, and the local real estate market. And buyers are astute. Even if you love your house and think it’s worth well over list price, no buyer (nor their realtor, lawyer, or lender) is begging to overpay.
At the same time, downplaying your house’s worth – otherwise known as being priced to sell – could cause you to miss out on tens of thousands of dollars. Part of the reason FSBO sellers make less on their sales on average is that they don’t price their property the right way.
But you don’t have to be like them. Here’s how to find out what you can sell your home for without picking up the phone to call a realtor.
What is My House Worth? How to Start Thinking About Home Price
Four predominant factors predict your list price. Some dominate your price while others guide it. All offer an estimate because no matter how many inspections you get or calculators you use, a house price is subjective.
1. Your Neighborhood and Amenities
Your neighborhood is perhaps the most significant pricing factor in your estimated home value.
Almost everything about your street and local area can determine whether your house takes a big swing in any direction. If you’re on the corner of a busy four-way intersection, your price will take a dip compared to a location on a quiet cul-de-sac.
Access and proximity to schools are also huge factors. School districts and home prices exist in a chicken-or-the-egg scenario. Do expensive homes bring on good school districts, or do top school districts drive up prices? The truth is that we don’t know, but surveys show that 91 percent of homebuyers say school boundaries are an essential consideration in their search.
That’s why a 6-bed 3-bath newly remodeled property in a neighborhood off the freeway with limited school choice won’t compare to a 3-bed 1-bath condo in the city’s hottest neighborhood with the best schools and latest amenities.
The properties themselves may be worlds apart. But liveability is about more than just square feet.
Although you can’t necessarily set a price based solely on your neighborhood, it will help you start to see exactly how it impacts your house price when you look at comparable properties.
2. Comparable Properties
If you have met with a realtor or two, you have heard the word “comps” bandied about.
Real estate comps are comparable properties, and they are your secret weapon when finding the perfect home price.
You use comparables to price your house based on the value of a similar property that sold recently in your neighborhood.
The process starts by using real estate listing sites to look at a group of listings that resemble your home. You include factors such as your neighborhood, number of bedrooms, and date sold.
Ideally, you narrow it down to six or so properties within your neighborhood or zip code (when comparable) and around the same size (bedrooms or square feet) as your house. It works best when you choose properties sold in the last six months with the most recent sales serving as the best indicator.
Don’t include for-sale listings in your comps. You don’t know what the final price is or what concessions the sellers made. Additionally, you want to know how long homes like yours spent on the market before the sale.
Go on a Reconnaissance Mission
With your list in hand, it’s time to hit the streets. If the neighborhood is close, head over in person. If you can’t, use Google Street View.
As you know, marketing materials can be misleading. You want to ensure whether the home really compares to yours or if there’s something the realtor left out of the online listing.
By visiting, you’ll learn more about:
- The home’s street location
- The neighbor’s curb appeal
- True walkability
- Nearby amenities (restaurants, schools, coffee)
- Nearby hazards (landfills, eyesores, noise sources)
Learning about the area tells you far more about the price and whether you should emulate it. For example, if one house is comparable in size and neighborhood stats (schools, crime, amenities), but is priced lower, you might find out that it has virtually no driveway and sits on a street where motorists speed by.
The lower price might be the result of its proximity to the busy road.
3. Usable Space
You price your house per square foot. But only the usable square feet add to your home’s value.
For example, if you have 2,000 square-feet, but 400 of that is a garage, and another 400 is an unfinished basement, then you only have 1,200 living spaces.
When buyers and appraisers look at your house, they are looking for liveable space. In particular, they look out for bedrooms and bathrooms. Adding a bedroom or bath can increase your estimated home value by as much as 20 percent.
4. Your House and Yard Condition
So you live in a beautiful area with boutique cafes, excellent schools and free parking for all?
While those traits are desirable, your house still needs to match your neighborhood.
In today’s busy world, buyers want a well-maintained house. They don’t want to end the house hunting and buying process to find themselves looking at new HVAC systems, a new boiler, and a new roof in under three years.
If that is the case, they better get a good deal to make up for the time, expense, and stress.
Upgrades and replacements play a role in the list price, but they also play into how easy it is to sell.
Why? Because there’s an appraisal coming your way.
The Appraisal and Your Home Condition
Any buyer who needs a mortgage will get an appraisal of your house. The appraiser walks through your house to look at general wear and tear, repairs, deterioration, and the house’s appearance. They then place your property into a category between C1 Excellent and C6 Poor.
You find out pretty quickly whether your home’s price is appropriate for the condition band.
Why? Because a bank won’t lend money for an overpriced house. It’s a liability and could land the borrower underwater. It’s bad news all around.
The maximum loan price will usually be 95 percent of either the selling price or the appraised value. Lenders go with whichever one is less.
That means if your house appraises at $40,000 under your asking price, lenders won’t provide a mortgage that covers it.
Even if the buyer wants the house, that means they have to come up with their downpayment plus the extra $40,000 to cover it. Someone who is actively viewing homes based on their current budget is unlikely to whip out an additional $40,000 in cash – even if they have it – for a house with an appraisal that’s far off your ask.
Should You Get an Appraisal Before Listing?
Even if you worked with a real estate agent, you risk the agent overpricing the house or underestimating the work needed.
So should you fork over money for an appraisal before you even list your house?
You can, but it’s not necessary.
There’s no such thing as an objective appraisal, and your buyer’s lender will always order their own appraisal anyway. Plus, if your market changes quickly, you could easily find that your appraisal is meaningless by the time you list.
So, if you don’t want to work with a realtor, have the cash, and have no idea how to price your home, it can be helpful. But it is by no means necessary – and it is sometimes a waste.
Priced to Sell: Tips for a Strategic Listing Price
By now, you have an idea of what your home is worth and what you can ask for. But that’s the first step of the process. Now, you need to make sure potential buyers see your listing.
After all, even if your house is priced to sell, it doesn’t matter if it doesn’t make it into your target buyer’s search.
For example, if you want to sell for around $300,000, consider avoiding pricing your home above $300,000. It’s tempting to add on an extra $10k to negotiate back down, but by pricing it at $310,000, you will miss out on buyers looking at $300,000 and under homes.
Of course, if the buyer has a great agent, they won’t miss out because they’ll search for properties up to $320,000 knowing that an offer is possible.
Second, avoid a strange number. Choose a nice round number that doesn’t call attention to itself. Your goal is to show off your house, not yourself. Stick to $750,000 – not $757,777.
Are You Ready to List Your Property?
You don’t need a real estate agent to tell you how much your house is worth. You can do all the research on your own.
Remember that a house price – and even an appraisal – is subjective. All the buyers (and banks) want is to get what they pay for.
Are you priced to sell and ready to invite buyers into your home? We can help you get listed on all the top sites, so you don’t miss out on buyers. And there’s no contract required.
Create a free account today to get the power of an agent with the freedom of an FSBO listing.