Pricing a property accurately is more often an art form than an exact science. Finding the market value for your home can be tricky in a buyers market.
What is Market Value?
Market value is determined by the price at which a potential buyer and seller agree to sell the property. Unfortunately, it’s not quite as easy as it sounds.
- No two buyers have the same life situations or preferences. A 2nd home market like Estes Park can magnify this issue because the people who buy homes here come from all over the world.
- No two properties share the exact same features. There are multiple intangible and unquantifiable factors that influence buyer’s perceptions of value.
Homeowners, Realtors, and appraisers are often stuck trying to put an objective value on a subjective reality. Online appraisal web sites like Zillow and others may give you a good ballpark price, but they are faced with the same hurdle of intangible factors influencing price.
How then do we establish a price?
We must look at your property from the perspective of those who you are trying to attract.
- Buyers regard value as most important. They will only pursue properties that have the most perceived value at the lowest price. Over 50% of properties within a buyers price range may NEVER EVEN BE CONSIDERED.
- Realtors heavily influence buyer’s decisions and sometimes will determine if a buyer even knows about the property or not. Typically, Realtors don’t get truly excited about a property unless it is the “best of the best.”
- Lenders and Appraisers can be just as tough to please. Even if a buyer likes the property enough to pay full price, a property priced over its comparable sold properties is in danger of not appraising. Without a good appraisal, a bank will not fund the loan and therefore the property will only sell to cash buyers willing to pay above appraised value. Most people who have enough money to buy real estate with cash most likely didn’t accumulate that cash by paying over appraised value on ANYTHING.
3 Simple Steps to Pricing your Property:
- Check the online appraisal services to get a general ballpark of your home’s value.
- Ask a competent local Realtor to verify the information you have with comparable sold properties.
- Search for similar properties online as if you were a buyer looking for a home to buy. Establish a price where your home provides more value than 75% of the competition. (Your Realtor should be able to help you with this as well.)
Of course, if no one knows your home is for sale, having your home priced well isn’t going to do you any good. The best way to get the word out is to hire a competent Realtor to market your property. That is a topic for another post. Stay Tuned.
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