How To Price Your Home For Sale

The market value of your home is not what your neighbor’s home sold for six months ago.   It is not your tax assessed valuation.  Nor is it the value the appraiser placed on it when you refinanced it a year ago.  The market value of your home is what a qualified buyer is willing to pay for it–today.

Real estate appraisers rely most heavily on historical data but what a home sold for six months ago is basically irrelevant because that home is off the market and no longer available to a prospective purchaser. So the best way to determine the value of your home is to get out and look at its competition—and then be realistic as to how your home compares to the others for sale in the neighborhood.

Neighborhood comparisons are very important because most homes in a neighborhood are built within a one to five year period of time. Age is the most important factor in determining your home’s value when doing a comparative market analysis.  A home that is ten years old should not be compared to one that is twenty or thirty years old.  Floor plans and amenity packages change approximately every five years.  Remember the yellow and gold phase?  Shag carpet?  Aqua plumbing fixtures?  Appraisers try to compensate by making an ‘age’ adjustment but it rarely is an accurate reflection of a home’s current value.

If you have a double car garage, don’t compare your home to one with a triple car garage. A third garage space may only have an appraised value of $10,000 but to a buyer it may the deciding factor. And then, there’s the traditional first floor family home with a living room, dining room, kitchen and family room vs. the more contemporary and sought after great room concept. When you’re doing your comparison shopping, stick to floor plans like yours.   Don’t compare a split entry to a ranch or a two-story, even if it is just down the street and the same age.

Currently, the Anchorage market has 1154 single family homes for sale and an absorption rate of 5.78 months.  There are approximately 200 single family sales reported to MLS every month.  The key to making your home one of them is accurate pricing.  A view of the mountains doesn’t necessarily add value to your home but it will help beat the average 64 days on the market.  So will a nicely landscaped yard, an extra large deck.  A clean home (dishes done, countertops wiped down, the bed made) adds value.  Call the ARC and get all the old furniture and clutter off the floor and out of the home. And, yes, that includes the garage.

Some sellers become extremely fond of their home when it’s time to sell.  They remember the good times–the pot lucks, the holiday parties, the neighbor who cared for their sick dog but, unfortunately, these memories do not create or add value. Discuss the value of your home in your realtor’s office or at the local coffee shop with your spouse.  You’ll be much more objective if you’re not sitting in your favorite chair.

Every home has a value range.  Even the best realtor can’t predict exactly what your home will sell for but most good realtors will give you a range.  If you want to beat the average time on the market, price your home in the bottom third of the range.  And then ask yourself  “Would I pay this much for my home?”  If the answer is ‘no’ deduct another $5,000 to $10,000.  And your home will probably be the next one to sell.

But what about appreciation?  Anchorage is different. We don’t have the problems that the lower 48 has.  In 2005, the average sales price in Anchorage rose 12.51%.  In 2009, it depreciated l.55%.  So far this year, it has increased 2.85%.  In other words, our market has been remarkably flat for the past two years. I say ‘remarkably’ because we’re not plagued with a high delinquency or foreclosure rate thanks to a limited amount of inventory.

However, if you want your home to sell, it must be priced aggressively and that’s within the bottom third of its range.  Remember, the average time on the market is 64 days.  That doesn’t mean your home is guaranteed to sell within that time.