10/06/2021 | News release | Archived content
RAMSEY SOLUTIONS
Selling your home can feel like a giant mountain of a task. As you get started, one of the first questions you'll probably ask yourself is, How much is my house worth?
It's so important to answer this question because getting the price wrong on something as big as a house could cost you tens of thousands of dollars!
But don't worry. We'll show you how learning the facts about your house and market, using a home value estimator, and working with a real estate agent will help you determine your home's full value so you can sell your house with confidence!
First, let's unpack two easy-to-confuse definitions of home value: fair market value and appraised value.
This is a fancy term used in the real estate biz to describe a home price that both the buyer and seller agree is fair-neither party would be losing anything in the deal.
Asking an experienced real estate agent to analyze and compile data on what similar houses are selling for in your area (also known as a comparative market analysis) is the absolute best way to determine a fair price for your house.
This is how much your local government thinks your property is worth. A licensed professional probably did an appraisal when you first bought your house. And your buyer will probably do another one when you sell the house.
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An appraised value is based on things like your home's age, location, square footage, upgrades and recent sales in the area.
This price is more for mortgage lenders and taxes and doesn't always end up being the same amount as the sales price. But if it's much lower than your sales price, it might send your contract with a buyer back to the drawing board!
Here are three easy steps that will help you understand your home's market value:
Believe it or not, your home's market value is not based on the following:
In a nutshell, market value is what buyers are willing to pay for your home.
As a homeowner, it's tough to see your home the way a buyer would. Although you think little Danny's handprints in the front porch pavement are cute, a potential buyer will see them as just one more thing to fix.
Keep in mind that a serious buyer will take critical mental note of the following:
Some factors affecting your home's market value are out of your control. For instance, if the economy is tanking, no one's going to pay top dollar for a house. The final price tag may also depend on:
If you're trying to sell your home, an expert real estate agent can help you analyze all this information to create your ideal listing price. Want to investigate on your own? A quick online search can give you a ballpark number.
If you search for your address on an online real estate marketplace, you'll likely find all kinds of facts about your home that are public record, including:
Along with these home facts, you'll see an estimated market value. Online tools like home value estimators put this number together by looking at the sales of homes in the area that are similar to yours, local tax assessments, and whether homes in your area are increasing or decreasing in value over time.
Before you get too excited about this number and slap a price on your house, dig a little more. While these online estimates are helpful, they're not always accurate.
The estimates are only as reliable as the amount of public record data the real estate websites can access. The less data gathered for your particular neighborhood, county and state, the less you can depend on this number.
As a home seller, the real value you'll get from these sites comes from the information you find about your housing market. Scroll through the data and see if you can answer any of these questions:
That's useful information you can discuss with your real estate agent when it comes time to set a price for your home.
If you're ready to sell your home, contact a real estate agent no matter what you find online. Your agent will have the most accurate information to help you decide on the right home price.
That's because a real estate agent doesn't pull stale information from the shelf. Unlike online tools, real estate agents have access to a multiple listing service (MLS) database of homes for sale in the area that will allow them to run an accurate comparative market analysis.
A good real estate agent will take the time to come and look at your home. They'll consider the landscaping, the condition of the house, any upgrades you've added and all those things that aren't listed in public records but make a real difference to potential home buyers.
Agents use the power of real-world experience to compare your home's nitty-gritty details to recent sales and current listings.
Let's say you installed a new roof last year but your kitchen is straight out of the '70s. An experienced agent knows how to weigh those factors and still come up with a competitive price. Remember, the market value is not based on formulas. It's based on how much someone is actually willing to pay for your home.
No computer can determine that, and your success as a seller rides on it.
Knowing how much your house is worth helps you sell it for the right price from the start. Not really understanding your home's value could lead you to undersell or oversell.
Price your home too high and buyers will pass you up without ever stepping through the door-which could end up forcing you to slash the price later. Price it too low and you could lose thousands of dollars. The right price gets you the most money in the least amount of time.
Home value is also important in helping you make decisions when it comes to handling things like:
Getting an idea of your home value at least once a year could be useful. But you probably don't need an expert's opinion each time-unless you're doing something big like selling or refinancing.
Since the value of your home influences things like insurance and taxes, keeping a pulse on how much your house is worth on a yearly basis could help you save money.
For example, if you bought your house with a down payment lower than 20%, you're probably paying for PMI-an insurance that protects your lender (not you) in case you stop making monthly payments.
If your home value goes up to the point where you now own 20% or more of the house, you can ask your lender to cancel your PMI and save yourself a ton of money!
If you're ready to sell your house, work with a real estate professional. For a fast and easy way to find an agent Ramsey trusts, try our Endorsed Local Providers (ELP) program. We only recommend top agents with years of experience so you can sell your home on your timeline and for the right price.