July 8, 2015

What's Your Home REALLY Worth?

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

www.TheCarrieHolleGroup.com

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