In last month's post about getting top dollar for your home, we mentioned the importance of knowing the approximate value of your home before putting it on the market. In today's Tuesday Tip, we're going to outline a couple of ways to gather that information.
First, a formal appraisal by a licensed appraiser. If you're going to sell your home, it is very likely that it will be appraised at some point in the process, as no credible financial institution will lend to a buyer without a formal appraisal. And while it's not standard for a seller to have their home appraised before putting it on the market, there can be some advantages. Every seller wants to find that sweet spot - the asking price that's high enough that you don't worry about leaving money on the table, but low enough that it will sell quickly. An appraisal will eliminate any doubt you have about how to price your home, and will give you confidence as you go into negotiations.
The downside to appraisals is that they aren't free, so a more affordable option is to have a skilled agent perform a comparative marketing analysis (known in the industry as a CMA). A CMA is an evaluation of similar, recently sold homes (or comparables) in your area. A CMA will establish the current market value of the home, or in other words, what buyers will be willing to pay for it. Having an agent perform a comparative market analysis is also a good step in the agent evaluation process. How quickly they gather the information and the way in which they share it with you are good indications of their responsiveness and ability to communicate effectively - two of the most important characteristics of a successful agent.
The current real estate market in Boston is seeing unprecedented demand, so many home owners who hadn't planned on selling, are kicking around the idea in order to take advantage of the opportunity to sell at top dollar. In many cases, these homeowners are not yet ready to talk to an agent, but can't accurately estimate the value of their home on their own, so they seek out home valuation tools, similar to this one. Tools like this give you almost instant feedback, and a great sense for whether or not it's a worthwhile time to sell your home.
Keep in mind that there are unforeseen situations that can affect the outcome of the appraisal, CMA and home valuation tool. For example, a neighbor may have had some financial struggles that forced them to sell their home quickly and at well below market value. Because these evaluations are based in part on the sale of comparable homes in the area, a situation such as this can affect the appraised or compared value of your home. Working with an agent that has significant experience in your neighborhood will help you evaluate ALL of the factors that should be considered to fairly and confidently price your home.