There are many things to consider when you decide to sell your home, but the most important factor bar none is the listing price. Making sure you list your house at market value will play the biggest role in selling your house quickly and at a desirable price. Asking your realtor to prepare a comparative market analysis (CMA) is a great way to figure out the right price tag for your home.
There are two major risks with pricing above market value. The first is that the listing will expire and you will be forced to reduce your price, which might not seem so bad, but the listing will no longer be fresh and buyers may attach less value to your home. By pricing too high in the beginning, you could end up with less in the end.
If you do receive an offer you’re willing to accept the other risk comes with an appraisal. The buyer’s lender will order an appraisal to determine the value of your home and if the appraiser suggests that it’s overpriced, the lender may not give the buyer the loan they were looking for and this can often result in the buyer withdrawing their offer altogether.
A CMA will show you a variety of things with the most important being the sold listings within the past six months in your area. You’ll want to focus on these because unlike active and pending listings, these show you the actual prices similar houses sold at. From these you’ll compare list prices with those that closely resemble your home in size, age, condition and location.
Appraisers tend to compare homes that have no more than a 10 percent variance in square footage and were built in the same decade. Just because the house next door to yours is about the same size, it doesn’t mean it will be worth the same if they were built 30 years apart.
You’ll also want to take the condition of your home into consideration. If you’ve updated your appliances, replaced breezy windows and loose shingles and remodelled your kitchen and bathroom that will all count in your favour, so compare your home to others with similar renovations.
You’re probably familiar with the term “location, location, location” and yes it’s very important. The desirability of your neighbourhood plays a key role in the market value of your home so compare similar houses as close to yours as possible. Look for ones that are on the same type of street - is it quiet and slow or loud and busy? Compare views, yard sizes, distances to grocery stores and schools.
Listing your home at the right price is the key to selling it quickly without having to accept an offer below market value. Taking time to go through a CMA with your realtor is the best way to determine the right price for your home the first time, and ensure that selling your home is a relatively easy and rewarding experience – like it should be.
Value of a Comparative Market Analysis
- June 10, 2009
Broker of Record
CENTURY 21 Leading Edge Realty Inc., Brokerage*