All homeowners are relatively biased when thinking of the value of their home. The agents become a little biased as well because they wish to be chosen as the agent which sells and makes a sizable profit. The buyers will be biased too, as they wish to purchase a home at a good price. Thus the biased cycle begins. If you are contemplating selling your home, you must fully comprehend the many ways and means professionals determine its true value. Having pre-conceived ideas or biased opinions on a home’s worth will not make the hoped for sale price more real. Our homes are a prized commodity, many of us having dreamed the great dream of home ownership for a good number of years. We’ve become personally attached, garnered much pride from making it comfortable, attractive and a haven. We’ve put a part of ourselves into the home and this is why we often place more value on it than it truly warrants. Yet all this does little to impress a potential buyer. The only thing which matters to them is the home’s true worth and nothing more.
So how do you determine the true value of your home?
To determine the true value of a home, one needs to engage a reputable home market valuer. You will also need a CMA (comparable market analysis). This is the most common method of determining the true value of a home. A CMA will show you exactly what properties similar to yours have sold for within a specific time frame. These analyses are not based on opinion, they are based on fact. This information will be of great value to you. Basically, GMA’s list homes in certain locations which are currently on the market, have sold, have sales pending on them or have expired from the market. It is primarily more important to garner information about SOLD properties than anything else. Listed houses on the market are not always the greatest indication of their true worth. These only inform you of what the listing prices are, not necessary what price they will really fetch. Those sales which have expired due to not selling can often indicate that they were highly overpriced.
If you are in the process of nominating an agent, they should develop and share a CMA with you. This should be automatic as part of their home listing presentation. One would be wise to engage an agent who is highly familiar with your neighbourhood. They could add a little insight which will go beyond the numbers on the CMA report sheet. A CMA report could show the average sold house prices for those similar to yours at $130,000 in the last year. But in the last three months the average of the home sales could have been $136,000 which would certainly indicate an increase in market values. Although a host of people tend to think that a CMA is solely a website, it is not. A CMA is a link-up system real estate agents have with each other. They have what is called a ‘main-board.’ This is a hosting area on the internet which all real estate agents add to. It is private and only accessible to licensed real estate agents and home finance establishments. The CMA is prepared by having an agent walk through your house which does not need to be in prime condition.
However, the condition of the property does affect the price. If you have plans to renovate prior to placing the house on the market do inform the agent. The agent may recommend improvements so that you can increase the value of the home. The agent will then research comparable prices using a real estate industry resource which is called the ‘Multiple Listing Service. This includes active listings, sold, pending and expired as mentioned above. The agent will then suggest a reasonable price. But do remember that a CMA is NOT an appraisal. Home values are frequently determined by the homeowner’s neighbourhood, age and condition of the home, the number of bedrooms and bathrooms, the square footage of the home and specific features. When it comes down to the basics though, the true value of a home is what a potential customer is willing to pay for it.