How do you know what you can sell your house for on the Market?
Scenario 1: Your neighbor Joe Brags-a-lot says he sold his house for $x amount of dollars. Your house is much better than his by far so you should definitely be able to sell yours for higher than his did.
Scenario 2: The ‘Zestimate’ off of Zillow says your house would sell for $x amount of dollars so you know it will sell for that or more. Or the county assessor says your house’s market value is $x.
Scenario 3: A realtor told you you could definitely sell for $x amount and they know the market right? They’re the experts on selling houses, so they must be accurate on your home’s value right?
The problem with these scenarios is that they are emotion-based reasons for deciding on a home’s value. Wanting to be equal or better than the neighbors and/or wanting to believe an estimate that puts the house at a greater value than its actually worth – these are based on ego and emotion and not on facts.
A house’s market value is based mainly on these 3 things:
1. The neighborhood its in. Is there a lot of crime? Is it run-down? Is it close to any popular commercial or artsy areas? Is it in a gated community? Is it in a suburb? These are question to look at to gauge possible demand for a house.
2. Does the house need any repairs or updating?
Is the roof is over 10 years old
Are the windows are the old wooden or aluminum ones
Does the floor needs updating
Does it have a weird layout (like having to go through a bedroom to get to a bathroom or utility room)
Do if any of the major systems (hvac, electric, plumbing) need updating or are they over 20 years old?
Does the outside look good – lawn is mowed and edged and there is not a jungle of bushes/vines/plants?
Does the siding, trim, and fascia look good/updated?
These questions determine value because ‘market value’ assumes the house is in perfect condition. If you want top dollar and to beat your neighbor, the house needs to have these updates done. An alternative to doing repairs is to sell the house on the market for ‘as is’ condition and accept the highest offer or sell to an investor to avoid having people come through your place for an unknown amount of time.
3. Square footage. A house’s number value is normally determined by the square footage of the house in relation to the neighborhood comps. If the sq ft = 1000 and the average price per sq ft is 75, then the ‘market’ number (assuming no repairs needed) is $75000. A house will probably sell for this or less.
Caveat: the largest house and the smallest house in the neighborhood do not sell for that amount. The largest house receives less and the smallest house receives more normally.