Your Home Is Ready for Sale – Now What?

What’s the first thing that comes to your mind when you think of selling your home?

For most of us, the first thing we think about is the asking price. How much should we ask for our home? What is our home worth?

It’s been noted that the most difficult task for “For Sale by Owner” Sellers is getting their homes priced right. We want to equip you with the knowledge you’ll need to price your home correctly.

You ultimately have to be realistic about your home’s value and price it accordingly.  A good place to start would be determining your property’s fair market value.  What’s that?

Simply put, the fair market value of a house is the highest price an informed buyer will pay and an informed seller will accept, assuming there is no unusual pressure to complete the purchase.  The fair market value is typically not the same as the asking price.

To get an estimate on your home’s fair market value, you’ll need to know what other comparable homes have sold for recently.

The best way to get an estimate on your home’s fair market value is to hire a Licensed Real Estate Appraiser.  This is the best choice for several reasons.  But first, a quick story.

When I was a rookie in the Real Estate Business, I very much valued the input of one very successful Broker who specialized in selling timberland and property/land with what we called “camps” on them. (I live in a part of Michigan where there is a lot of remote property and hunting and fishing is a great pastime for the people who live here.)

One day, I was looking for advice about the value of a 40 acre parcel that an acquaintance of mine wanted to sell.  My friend was a forester as well as a Real Estate Broker.  He said, “Jay, you know the value of the 40 will depend on several factors.  Location of course, but in addition, legal access.  Does the property border a county or public road? If not, is there a legal access for ingress and egress? Are there utilities, electric, etc., to the property? Does it consist of high land, swamp land? If it is timber land, what is the timber worth?”

He then said something to me I never forgot.

He said, “Jay, take an inventory of what you own before you sell it.”  He meant, in this case, have the timber cruised by a professional forester to determine the value before you sell.  In other words, know the value of what you are selling.  Again, and I cannot repeat this enough: Do not cut corners.  Hire a Licensed Real Estate Appraiser.

We have to remember that the appraiser’s opinion of value is exactly that, an opinion. His opinion, of course, is an educated opinion and is based on a study of the market.

Appraisers know the market. He’s constantly studying other homes, comparing them to what’s on the market and what’s recently sold. He has everything necessary including all recent sales to compare properties, sales prices and other important details. 

One would think that the word “Appraisal” speaks for itself.  If we look at Merriam Webster Dictionary, one definition given is: “a valuation of property by the estimate of an authorized person.” My experience has shown that Appraisers want to know the reason for the Appraisal. 

The most obvious reason Appraisals are needed is because banks or lenders require them for financing a home.  In this case, the Appraiser wants to know the purchase price.  Why?  Because that is part of the information needed for the study to arrive at the opinion of value. The Appraiser, in this situation, considers the fact that the Buyer selected this property after looking at others, and in the Buyer’s opinion this home is worth what he is willing to pay.  Some other reasons, but not all, that Appraisals are needed, include: divorce, estate planning, or settling an estate, refinancing a home and insurance settlements. When hiring an Appraiser, let him or her know that you want the appraisal to determine the fair market value of your property.

I mention this because letting Appraisers know the reason for the appraisal ensures you have the best chance at getting the most accurate estimate.

When hiring an Appraiser, be sure to use a local Appraiser that knows your area. It’s imperative that the Appraiser be local, as (in my opinion) an out-of-town Appraiser won’t know your local market like an Appraiser who lives and works in your area will. I also feel that Appraisers who have sold Real Estate in the past or who are selling it now in addition to doing Appraisals have a better understanding of market value.

Other places you should check for information are:

1.) City Hall, Assessor’s Office, Register of Deeds

2.) Commercial Records

3.) Check with your neighbors and friends

4.) You could try an online estimate from a website like Zillow. Although this may be helpful as a starting point, we feel that oftentimes the value they place on property is not very accurate. Zillow itself doesn’t refer to this service as an appraisal.

Although you can ask a Real Estate Broker or Agent to do a Competitive Market Analysis, or a CMA, an appraisal done by a licensed professional local real estate Appraiser will prove to be the best option. A Real Estate Professional may inflate the fair market value estimate simply in hopes of getting your listing. And of course, we know that an overpriced home could end up being for sale for so long that it becomes a “stale” listing. People won’t show an interest in it because they feel like something must be wrong with it since it hasn’t sold.

In addition to pricing our home correctly, an appraisal will assist us in convincing a prospective buyer that the home is priced right and our asking price is not too high. We have to be careful not to produce the appraisal in the beginning of our negotiations, as we may be asking more than the appraisal amount.

As mentioned earlier, the Appraisal is an estimate of fair market value and is not typically the same as the asking price. (Although it could be if a Buyer pays our asking price; then the asking price becomes the fair market value.)   You may be wondering, what’s the difference?  Well you can assume that there will be some negotiation with the buyer to reach a sale price. So your asking price would be slightly higher than the appraised value, as most buyers end up paying less than your asking price.  One of the realities of buying and selling real estate is that most often, Sellers get less than what they ask, and Buyers pay more than what they had hoped to pay.

In some situations, homes may be sold at a higher asking price, because as stated earlier, the study that had been done to arrive at an asking price is based on an opinion.  Occasionally someone wants exactly what you have for sale in your neighborhood and will pay the asking price.

The point is: We really don’t know what the fair market value is until a Buyer is willing to buy and a Seller is willing to sell. As stated earlier, the best we can do is hire an Appraiser to get his expert opinion.

Since you know that buyers are going to want to negotiate with you on the price, how flexible should you be with the asking price?   Most buyers also leave room for negotiation when they make an offer.  So both the buyer and the seller will need to be flexible to a certain extent.  Ultimately, it’s up to you to choose to accept or reject an offer or make a good counter offer.  Just maintaining a cool and rational frame of mind will help you to net a significantly higher price than if you were to be hasty in your decision making.   There will be more on this later in Chapter 6, “Receiving the Offer and Negotiating the Sale”.

Now that you have a listing price for your home, it’s time to make sure it’s ready for sale.

List your home for sale by owner at no charge to you at FreeRealtyOnline.com!