(CHEROKEE LAKE REALTY WRITES A WEEKLY COLUMN FOR THE GRAINGER COUNTY JOURNAL NEWSPAPER. THIS WAS A RECENT QUESTION ASKED BY A READER.)
There are several options to determine pricing on a home. Have an appraisal done, meet with a real estate agent that knows the area, and/or you can research what neighboring similar homes are selling for on your own. Let’s take a closer look at these.
A state licensed appraiser will visually inspect your home’s condition, square footage, neighborhood, and research what recent, nearby homes have sold for and compare yours to them. Banks will require an appraisal on a home before lending money. Appraisals are not an exact science. I have seen two different appraisals done on the same home and come up with different values. Typically, an appraiser will go back 12 months in sales, stay within your area, and use data from three homes sold to do a comparison. Once their research is done you will have a value of what your home is worth. The challenge here is that two different appraisers can use different criteria to come up with a value.
Secondly you can meet with a real estate agent that is familiar with your area. They will have a track record of what neighboring homes have sold for, are currently selling for, and how your home compares. Then they will assist you in coming up with a sales price. But their opinion is just that, an opinion. Banks will not use an agent’s opinion on lending a buyer money to purchase the home.
Finally, you can do the research yourself. Nowadays, a lot of information is available online that can help you come up with a sales price. But, again, your opinion is just that.
So, which is the best method since all have flaws? I will ask you this, what is your situation? Do you need to sell because of a personal issue or not? Take that into consideration when you price your home. The lower the price the more buyers you will attract. It’s not rocket science. Also take into consideration TODAY’S real estate market. An appraiser can pull comparative sales from last year but is today’s market the same? Your neighbor’s smaller home sold for a certain amount six months ago, so you feel yours, which is larger, should sell for a lot more, correct? Let me give you an extreme example to make a point. Let’s say we just declared war, or have another covid crisis overwhelm us, or the stock market crashes? Do you think any of that would affect the real estate market? Again, it’s not rocket science. And it doesn’t even need to be one of those extreme examples. It could be something as cyclical as the economy has slowed down.
What I will tell you is this, no matter what system you use to price your home, if it doesn’t sell in a timely manner, then your price is too high. The current real estate market will determine if you priced it correctly. If it sits without selling you have three choices. Let it sit until the market changes, and this could take weeks, months or years. Remove the listing and wait for better times. Hopefully. Or reduce your sales price. That is why your personal situation is so critical. Job loss or relocation, needing to downsize or upsize your home, illness, divorce, a death in the family, or needing to move to another state, are all personal issues that may dictate you need to sell now. If you need to sell your home, keep in mind that potential buyers may have a different perspective on its value, and be ready to adjust the price accordingly.
