Home prices seem to be higher than usual these days due to inventory shortages, buyer preferences, and other factors. But while you may understand that the larger concepts of supply and demand factor into your home price, it may not always be so obvious why an agent chooses to list your home at a particular starting value.
Values can be a challenge to determine when market factors are fluctuating, but a real estate agent’s goal is to set the price at or near the value that an appraiser would calculate while also maximizing the amount a seller will realize from the sale of their property as it sells quickly and doesn’t languish on the market losing value. There’s actually a lot of experience and art involved in the process!
Different brokers, with different perspectives, may well suggest different values. A seller might be tempted to choose an agent that says their property is worth the most, but be forewarned that this might lead a seller to lower their home’s list price down the line — missing out on its hottest time on the market and weakening their negotiating position.
An Agent Should Visit Your Home
Your listing agent should come out to your home and spend some time there to get a personal assessment of your home, its details, and upgrades. Seeing your home in person also helps an agent to distinguish what separates it from others on the market. While the Multiple Listing Service (MLS) database is chock full of valuable information and comps that can help in determining the valuation, a personal visit along with information from you — the homeowner — is essential in providing information that may give a better assessment of the home.
After a tour of your home, an agent should go and find comparable data on homes recently sold in your area. These are called ‘comps.’
One of the most straightforward ways that an agent decides to price a home is by comparing a home to those around it. The most accurate comps will be found closest to the subject property and sold most recently, though to be fair, no two homes are exactly alike.
Value can be added or deducted from a comp based on the age of the home, size, location, and amenities.
By looking at comps as well as properties currently on the market, an agent can consider how your home stacks up against the average and median sale prices, price adjustments, and local minimum and maximum sale prices, and prepare for the number of days on the market, the best time to sell, and the impact of overpricing, as well as alert you to homes that were listed but did not sell.
Comps don’t include information about things that don’t show up in sale records, but they do give the most accurate comparison of how your home measures up to similar homes for sale around it.
Intuition and Experience
After a review of the comps, an agent will use their own experience to suggest a sales range. For example, an agent knows that a property with good landscaping is easier to sell than one without; modernized homes are typically more valuable than those in original condition; and selling a home furnished may be a temptation to buyers in some locations.
Even if you feel that you know how much your home is worth, it is smart to listen to your agent and let them give you a range of what they feel your home is worth. A good realtor will suggest a lower and upper bound and explain their reasoning, including how a certain price may help a home sell faster, how updated fixtures and appliances can help a home sell with a higher listing price, or how a minor fix can save you on an inspection allowance down the line.
Don’t set your expectations too high or to the same amount as your neighbor. In truth, the market sets the price for your home, not your real estate agent. But with their special skills and tools, an agent can help set a listing price for your home that achieves your best value — of time and money.
Thinking of selling your home? Let LIST WITH ELIZABETH® come to do a walk-through to help you determine a potential valuation for your home sale today!