The simple answer is it is worth what a buyer will pay. How do you determine this amount without leaving money on the table?
- If my house is worth what a buyer is willing to pay, shouldn’t I price it high and hope to find someone willing to pay that much?
Answer: If you price your house too high you will not attract as many potential buyers to even look at it. If a buyer can only qualify for $300,000 mortgage, pricing your house at $375,000 will mean that buyer will not even consider it. Getting the price right from the start will result in a quicker sale for a higher value. Homes with multiple reductions in price tend to have a stigma about them and draw lower offers, if any.
- You can find out exactly what a buyer is willing to pay by checking:
- The county tax assessment value
- The amount your neighbor’s house sold for
- The amount it is insured for
- The amount you paid for it plus the inflation rate over the time you owned it
Answer: None of the above. While some of these may provide some insight on what a buyer will pay for your home, none of them will provide the exact amount.
The county tax assessment can be up to 8 years old and most likely, does not reflect the current market value.
Your neighbor’s house, while it may be very similar, is not the same as your house. Even if the construction and exterior is the same; the interior likely has different finishes that a buyer would value differently.
The amount your home is insured for does not include the value of the land and would not represent the market value of the property.
The amount you paid for the home and the rate of inflation would not take into consideration other market factors and appreciation.
- Should I get an appraisal before I sell my house?
Answer: An experienced agent will provide a current market analysis to determine how you should price your house. While this is not the same as an appraisal, it should be very close. On average, an appraisal costs $311 in North Carolina. Most sellers do not want to spend additional funds unnecessarily, but having an appraisal to show potential buyers can make negotiations go smoother.
The lender will require an appraisal and typically will recommend an appraiser to the buyer. The lender wants to make sure the house, as collateral for the loan, is worth more than the amount being loaned. Appraisals are not an exact science and one appraisal can vary slightly compared to a valuation by a second appraiser. This becomes an issue especially if the appraisal is lower than the contracted price.
- How does my realtor use “comps” to provide a current market analysis?
Answer: Realtors and Appraisers use “comps” to estimate current market value. Comps are the 3 to 5 properties that are similar to yours and have sold most recently. They should be in the same neighborhood, similar is style and features. The sale should have been very recent; ideally within the past month or two.
Since none of the 3 to 5 properties are identical to yours, adjustments for features included or missing are made to arrive at a value for your home. So, for example, if a comparable sale was for $300,000 but the home did not have garage and your property does, then an additional amount will be added to $300k to account for the garage. If your lot size is smaller than the sold property, then an amount will be subtracted from the sold price to account for the difference in land value. After making all the adjustments for how your property differs from the comparables, we can determine the estimated sale price and make recommendation for how much to list your property.
To take the comps one step further, your Realtor will perform the same exercise on currently listed properties. After all, these will be the properties that are your competition. The current listing prices provide insight on how the market may have changed since the comparable properties sold. Are prices rapidly increasing and days on market reducing? Is there a shortage of inventory on the market? These factors may allow your listing to command a higher amount in anticipation of future market direction.
The key element in this task is the selection of comparable properties. Your Realtor’s local knowledge is essential to selecting appropriate properties. Even within the same community, there can be significant differences in values.
- What things can lower the value of a home to a buyer?
- Trees & shrubbery
- Wall paper
- All of the above
Answer: e – All of them. Beauty is in the eyes of the beholder and every buyer will have their own preferences. Trees and shrubbery that has not been maintained may make a buyer wary of expensive yard work and hiring a landscaper. A bulkhead in poor repair could also signal an expensive repair. Paneling or wall paper design may not appeal to a given buyer. This is why many Realtors recommend painting and decorating with a neutral palette. Even small repairs that have not been completed can signal to a buyer that the home was not well maintained. Anything that negatively impacts the perception of a buyer can lower the value or turn the buyer away.
- What things can increase the value of a home to a buyer?
- Hardwood floors
- Remodeled Kitchen
- Engineered “wood” decks
- Outdoor lighting
- All of the above
Answer: e – All of them. Buyers today tend to prefer hardwood floors over wall to wall carpeting especially in the Outer Banks with the sand that can be tracked inside. Remodeled kitchens and baths are valued by buyers, as long as it is tasteful, functional and uses quality materials. Outdoor living is part of the Outer Banks life style and engineered decks require less on-going maintenance. Outdoor lighting and curb appeal will create a good first impression for a potential buyer. A well maintained home where attention to detail is apparent will show well and motivate buyers to purchase.
- What are some things that impact value that are unique to the Outer Banks?
- Rental income
- Community Amenities
- All of the above
Answer: h – All of them. Many homes in the Outer Banks are used as second homes or as investment properties. An oceanfront home will be able to get higher rent for vacation rentals but can also be vulnerable to beach erosion in some locations. Soundfront homes are not as popular in the vacation rental market but highly desirable to year round residents. The elevation of a property will determine its risk of flooding and insurance rates. The past history of rental income provides a track record for comparing like properties. Many homes are also sold with the furnishings and the quality and appeal can impact the perceived value. The community amenities and management of the Home Owners Association will impact the values of properties within the community. A home with a view, even if not waterfront, will be valued higher by buyers than one without a view.
Every home is unique. Every buyer also has his or her own subjective preferences and desires. At Eillu, we believe there is an art as well as science in pricing your home and staging it to appeal to the greatest number of potential qualified buyers. We have over 20 years’ experience in the Outer Banks real estate market. We stay on top of national economic conditions and how they will impact local pricing. Contact us today for a current market analysis to find out what your Outer Banks home is worth.