If you are thinking of selling your home in 2021, then you are probably wondering just what the value of your home will be! You may decide to take a look at the Zillow Zestimate to come up with a value – but these can be very inaccurate - their algorithms tend to take into account only what is in the public records, they overlook those things that only a human can evaluate, such as condition, location, upgrades & unique features of your home and they are based on past sales and don’t take into account current market trends in the area!
So what should you do? I recommend that you have at least one Realtor® come by your house and prepare what is know as a Comparative Market Analysis or CMA. What is a CMA? It is a way to compare your home to other similar homes in the market! The process to come up with a value in a CMA can be very similar.
So how does a Realtor® prepare the CMA?
STEP 1 – I GATHER AS MUCH INFORMATION ABOUT YOUR HOME!
The first step in preparing the CMA is to get as much information about your home as I can. There is a lot of public information – the tax record, the old MLS listing from when you purchased your home, Google Maps, and, yes, the Zillow Zestimate. This is probably something you have looked at & I will want to know just how they came up with value. I will even get in my car and drive through your neighborhood to get a feel for the area, and see if there are any FSBO’s on the market!
STEP 2 – PULLING SOLD COMPS
Next I will want to see what homes sold for in your neighborhood and your area! First, I want to see just what the neighborhood is doing – how quickly homes sell, did sellers have to pay concessions, etc - so I will look at all the solds in the neighborhood even if not comparable to yours. Then I will want to pull those homes that sold that were the most comparable to yours (style, size, location, bedrooms, baths, etc)! I want to stay in your neighborhood, but if there is nothing available, then I may have to go outside of the neighborhood! I will make sure that I am looking not only at the MLS, but also the tax records as there may be some For Sale By Owner homes that have also sold and are not reflected in the MLS.
STEP 3 – PULLING ACTIVE COMPS
Here you will want to know what you are competing with! Buyers look at everything so you will want to see what buyers could be looking at in your neighborhood, as well as everything that may be in the same area or similar areas to yours in the price range. If you watch Flip or Flop on HGTV, after Tarek & Christina get done doing their flip, they talk about what other homes are on the market in that area and how their flip compares to those other homes! This is exactly the same process!
STEP 4 – PULLING THE PENDING COMPS
Homes that are currently under contract but not yet closed give a very good picture of the state of the current market in your area! All real estate is local, even within the Richmond market, so seeing how quickly homes went under contract helps when trying to determine the value for your home!
STEP 5 – PULLING THE EXPIRED COMPS
These are the homes that the market rejected for some reason! It is important when pricing your home that you know just what the buyers rejected! Every home will sell – it just needs to be priced according to the condition, location and amenities!
WHY NO PRICE/SF IN THE CMA?
One of the things that I have been asked is why I don’t use the price/SF when calculating your home’s value. I think that using this number is a poor indicator of your home’s value. Let’s think about 2 houses in the same neighborhood with the same style and about 2000 SF---
- Home A has builder grade finishes such as a 20 year roof, laminate counters, vinyl floors in the kitchen and a small deck, on a corner lot at the entrance to the neighborhood!
- Home B has 50 year architectural shingles, hardwood floors, kitchen renovation that includes new cabinets/granite counters/stainless appliances, deck and brick patio and is on a cul de sac backing to a wooded area!
If Home A sells for $120/SF and you are valuing Home B, you certainly would not want to price it at the same $120/SF, as you would be undervaluing Home B, which should definitely sell for much more money than Home A. Likewise, if Home B ends up selling for $280,000 ($140/SF), then it stands to reason that Home A should not sell for the same amount of money that Home B sold for! As you can see, using price/SF as a way to value your home does not take into account all of the differences between these 2 homes in the same neighborhood!
CONCLUSION
As you can see, putting together a good Market Analysis is key to making sure you price your home properly to sell quickly, even in this real estate market! It is not something that can be put together in a few minutes or using a quick method like price/SF. When you want to know what your home is worth, ask a Realtor to prepare a CMA for you, and then look at how much detail was put into it and how knowledgeable the Realtor was about your neighborhood. Feel free to call or email me if you would like a CMA done for your home!
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The above information was provided byBarbara Reagan. I can be reached via email at [email protected] or by phone at . I have helped people with their real estate needs throughout the Richmond area for over 25 years! I am a full time Realtor who covers the entire Richmond, Virginia area including the city of Richmond, Chesterfield County (including Midlothian, Bon Air, North Chesterfield and Moseley) as well as Henrico County (including Short Pump).
