I feel like I've been in real estate half my life. Oh
wait, I have. Because I'm a fossil in this profession, some things are
second nature to me. There are some things I just instinctively know.
It's kind of like "knowing" when I go into my son's room there
will be dirty underwear on the floor. Like "knowing" my husband
forgot to pick up bread on the way home. Like "knowing" I
probably made a fool of myself last night after the shots.
Recently I had a dear friend enter the real estate industry.
In helping her get acclimated, I've had to think through things that I
just "know." One of these things is the method of how to value
a home. Oh yes. There is the "How to Comp a House 101"
that every agent learns, but I wanted her to really get it. Feel it.
Be one with it...
I realize that most people have a sixth sense about home
valuation, especially about their own. However, since I've had to
recently sort through my thought process, I thought I'd share how it's really done.
1. Price-per-square-foot. This is
the most widely talked about predictor of home value...and it's the most
misunderstood. These numbers must come from like homes
that have sold and closed in your neighborhood. I cannot
compare a ranch to a two-story or a 4000 square foot home to a 6000 square foot
home. And FYI, the larger the home, the less price-per-square foot (in
the same neighborhood). The square footage used in this calculation does
not include below-grade space. No basements. However, basements do
count in total price calculation. For example, if you don't have a
basement, and everyone else does, your price-per-square foot sinks like the
Titanic. The same goes for an unfinished basement. And if your
basement dates back to 1974 and everyone else on the block has flat screens and
wet bars. I see a loss in your future.
2. Time. Although it may be fun to
sit around and talk about what your neighbors have sold their homes for, those
numbers mean nothing. Nothing. I have to use closed sales within
the last 3 months...6 months max. If I can't find a solid sample within
this time period, I have to look within nearby neighborhoods and adjust
accordingly.
3. Bedrooms
and bathrooms. So you have four bedrooms when all of your
neighbors have five? Go back 3 spaces. You have five, but two are
in the basement? Go straight to jail and do not pass go.
4. Yard. The
size of the yard counts a bit, but the location of the yard or what you can see
while standing in the yard might be a biggie. So you're on a lake (let's
be real...a retention pond)? Some like that, many do not. It's a
wash. The same goes for cul-de-sacs and corners. A large lot that
backs up to a nature preserve? A one-acre wooded lot? Very good.
You will see an increase in price is when you have something unique or
much more appealing than the others.
5. Finishes. Although
you will never see dollar-for-dollar, a home that is updated will fetch a
better return.
6. Condition. This
isn't rocket science. The better shape your home is in, the better off
you are. If all your neighbors are a savvy as you, all things are equal.
7. Layout. Depending
on the area in which you live, the floor plan is pretty important. Here
in Indiana, we are very traditional (and boring...read my past blogs). Anything
that strays from the norm can get you in trouble.
So there you have it.
When you call me to do a market analysis on your home, I will spend a
great deal of time analyzing these things. I know you want to sell your
house for what you bought it for in 2005, but that's just not happening,
friend. What will happen is that I will put a ton of thought into pricing
your property to try to get you the most money possible. And I
"know" that I will do just that.
Comp you later,
Carrie
Carrie
No comments:
Post a Comment