Home Comparables and Value
Valuing a home is an art form. It's very easy to lose money or price yourself out of the market and never sell your home.
When buying a home, you don't want to overpay and be upside down in your mortgage should the market decline.
Sure, there are factors and guidelines to follow, but market value is determined by what a willing buyer and a willing seller agree to. Not only that, it follows the precedent that recently sold "comparable" homes have set.
So, what is a home comparable and how does it contribute to your home value?
This can be a fluid definition based on the price range, scarcity, and location. Generally, in Tennessee, the ideal scenario is to find a home in the immediate area, within about 300 sq ft of the same size, with a similar lot size and similar finishes, and that has sold within the last 3 months. This isn't always reality and we often must stretch the criteria a bit. Some higher end homes may not have a similar home anywhere in the area. In that case, it's important to have someone with the ability to put a value on your home that is reasonable. Sometimes, it comes down to making an educated guess, waiting for buyers to make an offer, and then adjusting.
We always try to identify three comparable homes. If there is a home that was sold for well under other comps or a home that recently sold for much more, it is discarded as an outlier.
We also take the current market conditions under consideration. If the market is a seller's market, or is trending towards a seller's market, we may price your home at the higher end of the comparable range, with the knowledge that home prices are rising. Vice versa for a buyer's market.
With all this considered, it can all be thrown out the window, in some cases. Market value is a very "in the moment" decision that depends on various variables and other recent transactions. It's vital to have a professional advising you to get the most money in the shortest amount of time on the market.
Contact Us if you have any questions or are interested in buying or selling a home.