The market is always fluctuating, which means so is the value of your home. What’s it worth today? Good question, let’s figure it out. I often hear talk of using Zillow Zestimates for determining market value — I wish it were that simple. The site’s automated valuation model (AVM) technology might offer a speedy method for getting a ballpark number, but it misses so much more in the math-driven process. Determining market value is part science, but also art — it necessitates keen understanding of what local residents value along with close investigation of what is, has been, and will be available within a well-defined area.
What’s a comp?
A tedious yet more effective way to determine value is to research comparable homes, or comps, and study current trends in the local market — the closer to your home the better. Comps are homes that have recently sold or gone pending, are currently listed and not selling, or were once listed but since expired and pulled. When identifying comps, I recommend keeping your selection current. Start with those sold within the past 6 months, especially in a fast-changing market, then expand to 12 months as needed.
But what is a good comp, and what is a bad one? For the closest matches, you’ll want to consider multiple variables. Begin with the obvious like total finished square feet, location, number of bedrooms, and available garage space. Look too at home style, age, overall condition and recent updates, especially of kitchens and baths.
Location
If possible, choose properties within a half-mile radius of your home. Go beyond, up to 1 mile, if necessary but avoid crossing major roads, rivers, and other geographical barriers. If your home has shoreline, choose other waterfront properties. If it’s next to a highway or on a busy street, follow the same principle. If you know some blocks in your neighborhood are cherished more than others, consider streets best resembling yours.
Home Features
Start with the obvious — is your home a single-family, multi-family, condo or townhouse? Next search for properties close in home size and lot size with the same number of bedrooms and baths, when possible. Match style as well. For example, if you’re selling a rambler, a 2-story foursquare will not be your best bet. Instead, find similar one-stories. If your home has a distinct architectural style, like Mid-Century Modern or Queen Anne Victorian, look for homes similar in design and pedigree.
The same goes for age. Match historic homes to other older homes. Tear downs and new builds are common in city neighborhoods but can carry a heftier price tag. A typical 80-year-old home is usually no match for new construction in terms of market value.
Condition and Updates
Look beyond the numbers. Study photos and listing descriptions to discern the level of finish and extent of updates. (Touring a home live is better, but an unlikely option once it’s sold or under contract.) Pay particular attention to kitchens and bathrooms (pictured less often, unfortunately). Hunt for recent updates including new appliances, cabinets, counters, and fixtures.
Take note of other value-adding updates such as flooring, HVAC systems, new garage, windows, roof & siding or extensive landscaping. Read descriptions and acceptable offer terms to glean info about condition (photos can be deceiving.) For example, if it was sold “as-is” or as a distressed property it may have been in disrepair which will affect value. Finally, consider extra amenities like carriage houses, finished space above garages, and detached bonus spaces such as offices, art studios, “she sheds”, or ADUs (auxiliary dwelling units).
Get help when needed
This type of market research and analysis is the everyday work of real estate agents. It’s what we do when working with both sellers and buyers. Preparing an accurate CMA (Comparative Market Analysis) is of course a critical step for sellers getting ready to list, but it also helps buyers zero in on a justifiable price when making an offer. Most likely your buyers, their agent and appraiser will all be analyzing comps and local market trends to determine how much your home is worth. You should be too.
It’s helpful for owners to understand which factors and forces are contributing to their homes value when preparing to sell. But digging for comp data and combing local listings can be a time-consuming pursuit. If you’re feeling overwhelmed at the thought of it, consider connecting. I’m happy to search on your behalf and pull together a comprehensive CMA to get you started.
Heidi Swanson is a Realtor® based in St. Paul, Minnesota. She writes a blog to share information on variety of topics including buying and selling, market conditions, homeownership trends, local events and more. Reach her at heidi@lyndenrealty.com or 651-503-1540.