Cover story: Appraisal key to selling price

Question of the Day

What has been the biggest debacle on Obama's watch?

View results

There is a popular cartoon that has been making the rounds of real estate appraisers’ offices for the past decade or so, featuring views of a home from the perspective of different pairs of eyes. The homeowner sees the home one way, the buyer, another, the real estate agent, yet another, and the appraiser, another way yet.

It’s just the kind of inside joke real estate appraisers can appreciate, especially these days.

“The biggest key to pricing your home accurately is to find a good agent and hire a qualified appraiser,” said Greg Colton, owner/manager of the Colton Appraisal Group in Clinton. “These days everyone is focused on appraisal quality.”

Pricing your home can be challenging at any time, and expectations can confront reality no matter what the state of the housing market. Pricing is even more confounding right now, with markets changing, neighborhoods developing, and foreclosures, short sales, and real estate owned by banks crowding the market.

“The market is so mixed,” said Mary Bayat, a broker/owner with Bayat Realty in Alexandria. “The game has really changed. A lot of factors are in play now, including consumers themselves.”

At some point, however, those different points of view will come in line. The fact is, having another pair of eyes to look at your home can really help price your property accurately. Don’t let your estimations of value be based on history and memories, two things that don’t translate easily into actual dollars. And remember that homes that were appraised during the boom years frequently have overinflated values that can have an impact on sellers’ expectations.

“Realtors know neighborhoods and they know properties,” said Pat Kline, chairman of the board for the Northern Virginia Association of Realtors and a Realtor with Avery-Hess in Springfield. “They can tell you why properties are priced differently.”

Your real estate agent will explain the key factors you will need to take into consideration when determining how to price your home.

Start by considering how much time you have to sell. If you must be out of your house in three months or less, you’ll want to price your home accordingly. Pricing below market value can mean multiple offers in the greater Washington area, where many neighborhoods have hardly felt the press of the recent real estate crunch. You might even be taken back to the thrilling days of yesteryear and find your home the subject of a bidding war.

Of course, if you can wait a bit, it may be worth your while to set a higher price.

Washington area home prices generally are better than they are in other parts of the country, but that is not necessarily true across the board and neighborhood by neighborhood. Certain neighborhoods, in places like Chevy Chase, Arlington, or Bethesda, are perennially hot; others less so.

“Buyers are interested in proximity to Metro or nearby highways, and how good the schools are,” Ms. Kline said. “All of these factors can affect marketability.”

If you are lucky enough to live in one of the area’s perennially hot markets, it makes sense to push your price to the high end, Ms. Kline said.

Work with your real estate professional to develop a sense of the current market and market trends in your particular area. Be sure to find out how quickly homes sell, how many properties are available and how the market has been trending recently.

It is important to compare the price you intend to ask for your home with other homes that have sold recently - meaning, less than three months ago.

“When I appraise a property, one of the questions I ask myself is, where would a typical buyer go to get a home like this one,” Mr. Colton said.

Although appraisers usually enter the process after a contract has been offered, some property owners hire an appraiser before listing their home to help them determine price. The $200 to $300 fee the appraiser charges can easily offset an unexpected cost or development later in the game. Be sure, though, to use a certified appraiser. Visit www.appraisalinstitute.org and click on “find an appraiser.”

Real estate professionals make use of “comparables” - homes in similar neighborhoods, styles and condition - when determining the price they can ask for yours. If, for example, you live in a mid-‘60s split-level house, you should look for houses of a similar style and age to yours in your neighborhood.

Of course, few homes are totally comparable. One may have a finished basement, another a different kind of flooring, yet another an added sunroom. Each of these can affect the price buyers are willing to pay.

“My personal experience has been that an agent’s strategy differs based on condition and location,” Ms. Kline said. “If you have two houses that are 15 years old and one has a new kitchen complete with stainless steel appliances, buyers will pay more. Location is also very important.”

Ask your agent for a “comparative market analysis” (CMA), which looks at comparable recently sold homes, on-the-market homes and homes that were on the market, but never sold. Be sure to compare the original list price with the actual sale price of the property. Learn about the “absorption rate” for your area - the length of time it would take all the houses on the market to sell, given current conditions. Just remember that predicting the market can be tough.

“A lot has to do with consumer confidence,” Ms. Bayat said. “When that changes, everything changes.”

While a CMA can help in determining price, there still may be other factors in play that can affect your bottom line. Neighborhoods that have a number of properties owned by banks or offered as short sales pose their own sorts of challenges. Compete with too many homes like these, and you may end up pricing your property for far less than you wanted.

“If these comprise more than 30 percent of the market, it has a significant impact on value,” Mr. Colton said. “You’ll have to take those prices into account an adjust accordingly.”

If other homes are for sale in your neighborhood, consider attending their open houses to get an idea of your competition. Looking at upgrades, location and general condition can give you a better idea of where to set your price.

When it comes to selling your home, packaging is nearly as important as pricing. Decluttering, painting and doing basic repairs are key - and usually inexpensive - ways to get the most for your property.

“You want to put your home into a condition that is as new as possible,” said Nancy Harvey Steorts, a Realtor with Long & Foster and a member of the NVAR Board.

Ms. Steorts noted that staging can be a key factor in determining price.

“Buyers need to be able to visualize themselves in the property,” she said. “They should not have to mentally undo what is already there.”

Do you have a pool? A panoramic view? A mother-in-law suite? These are amenities that can mean a great deal to buyers or little at all, depending upon what current buyers are like in your neighborhood. That’s why it’s important, real estate professionals say, to have an accurate gauge of what buyers want and need.

“Young professionals do not want a big house with a big yard,” Ms. Bayat said. “They’re more interested in gadgets.”

In other words, do buyers really want a home like yours?

Homes that can be more difficult to price often are one-of-a-kind properties that don’t always blend in with the surrounding neighborhood. This may include larger properties that are surrounded by more modest homes, an older home surrounded by new development, or homes with distinctive features peculiar to a specific owner.

Other homes may feature “adverse amenities,” such as being too close to a busy road, that may affect pricing, Mr. Colton said.

Meanwhile, buyers in the condo market look at their own set of factors when it comes to price, Ms. Steorts said.

“People who are in the market for a condo look at the reputation of the building, the management and whether utilities are included as part of the condo fee,” she said. “They want a conservative board of directors that is financially conscious and keep the property in A-1 condition, but do it in a cost-effective way.”

Buyers in the market for a condo also look at the available amenities, such as whether there is a convenience store, beauty salon or business center in the building, or whether there is a sports facility nearby.

If you don’t have the time or money for a major upgrade, consider offering another reason for the buyer to prefer your property to the others on the market. There are a variety of ways to make your home more attractive pricewise. They include seller incentives, such as covering part of the closing costs, offering rebates to buyers or providing added value, in the form of a year’s worth of home insurance or homeowners association dues.

Even in the best of times, certain homes don’t seem to sell. If this is happening to you, a price reduction may be in order.

Getting feedback from other real estate professionals about how well the property has been showing can go a long way toward making a proper price adjustment.

“It’s really important to keep sellers updated,” Ms. Steorts said. “If other agents feel that something isn’t working, they need to know.”

Just don’t wait too long or drop your price too little. Remember, you are less likely to get the price you want the longer you wait, and a lower price may well get considerable attention.

“If you are going to reduce the price, you should be ready to reduce it by a substantial amount,” Ms. Kline said. “That might mean a drop between $10,000 and $30,000.”

Comments
blog comments powered by Disqus
TWT Video Picks