Proving House Value
To sell, your property has to prove its value to three people:
- The buyer’s agent whose job is to look for the best homes in the buyer’s price range.
- The Buyer who selects from these homes.
- The lender who decides whether the house is actually worth the price.
Your real estate professional will take all these into consideration when helping you set the list price. To do this, your agent will create what is commonly referred to as a “Comparative Market Analysis” or CMA. It allows your agent to analyze more up-to-date local market conditions by factoring them into:
- The houses that have been recently sold
- The houses that have been recently placed on the market or listed
- The houses that have been expired or withdrawn from sale
- The houses that are under contract or pending
These are the listings that are currently on the market. Some sellers make the mistake of looking strictly at active listing as the basis for setting their list price. The problem with this strategy is that the only thing we know about active listings is that they have not been sold. So, while knowing what our competition is selling is the part of the puzzle, is not the only piece.
Withdrawn and Expired Listings:
These houses haven’t sold either after being on the market for some time and in some cases, even going through several price reductions. Usually, these homes are overpriced or have major issues that deter buyers. By analyzing the records of withdrawn and expired listings, your agent can determine where those pricing strategies went wrong. That information can help you see the power of getting the price right at the outset.
Sold and Pending Listings:
Your agent will also analyze sold and pending listings. Unlike active, expired and withdrawn listings, sold and pending listings can show what prices are attracting buyers and getting offers.
Your agents’ comparative market analysis will help you to determine where the market has been, where it’s going and where it’s not. To be a successful seller, you’ll need this knowledge to know and set your price.