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Your Guide to Selling a Home

Everything you need to know to buy a home without an agent.

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Your Market

Understanding your localized market will help guide you in all your decisions for selling your home. Your market will dictate any repairs and updates you should do to help sell, as well as how to price your home and who your potential buyers are so you can focus your marketing direct to them.

Your local real estate market consists of the following and comparing your home to others that may be for sale for your same buyer-types.

Location is very dependent on who your likely buyer is. For example, if you are selling a 4 bedroom home then it is most likely a family with kids who would be interested in buying it, and therefore K-12 schools are very important. If your home is a 1 bedroom condo, then this may not be such a concern as it is less likely a family can fit in a 1 bedroom condo.

You are also comparing your home to the other homes available for sale that are similar to yours. If there are twenty homes backing to open-space and yours backs to another house and is in the local airport flight patterns, then yours will likely be less desirable to buyers than the other options available to them. Therefore your price may need to be less than the others, and doing high-end remodeling before selling may not be worth it for those buyers.

  • Schools K-12 and including universities
  • Nearby businesses & employers
  • Walk/bike to shops, restaurants, and parks
  • Airports with flight patterns overhead
  • Major highway access
  • Highway or Railway noise
  • Public transportation nearby
  • Crime levels and type
  • Soil, water, and other environmental hazards
  • Natural Disaster prone area - flood, wildfire, earthquakes, tornadoes, hurricanes. Can buyers get home owners insurance for the home? Are the premiums higher than other homes in the area? Are buyers required to get additional insurance coverage such as flood or wildfire insurance?
  • Neighborhood - do people keep up their homes, or is the neighborhood going downhill (and their value as well)?
  • Future development (already planned, or could happen). 
    • Will the open-space be sold off and commercial or residential built on it?
    • Will a new parkway/highway be built nearby, adding to noise issues and possible eminent domain  where homeowners are required to sell their home and land for these developments?
    • Will future developments increase or decrease property values?

The type of your home will also dictate who your likely buyers are and when you compare your home to others on the market, you will typically want to compare to others that are of the same type. Note: there are exceptions to this, for example when looking at the luxury market, where a $3 million buyer may opt for a luxury townhome or condo over a house for various reasons. In this scenario, they may likely be looking at both types of homes: houses and townhomes.

  • SFH (Single-Family Home)
  • Townhome
  • Condo
  • Manufactured Home
  • Mobile Home
  • Homes on leased land

Location of your home's lot can offer a lot of additional value over comparative homes for sale. People will pay more money for views! Also privacy, water lake access, and non-through streets. How much are these each worth? It will depend on your local market and neighborhood. You may want to look at past sales for homes with similar features to see how much higher they sold compared to other homes without these features in the past to get an idea of the percentage of additional worth.

  • Backs to and/or front faces: open-space, water: lake/pond/wetland/creek, golf course, park, school, road
  • End lot
  • Access: busy road, cul-de-sac, alley, multiple access points
  • Acreage
  • Views: mountain, city, lake, ocean, open-space. This can include "seasonal views" only seen when the leaves have fallen off the trees.

Home amenities are also locally market dependent. For example, a/c is really needed in southern states but may not be required in the north. Swimming pools are in the back yards in a lot of Florida homes, but considered a negative for most home buyers in Colorado. So figure out what's the norm for your area, and if you are lacking a feature that everyone else has then know that could be a turn-off for most typical buyers in your area.

  • Heat source: furnace, mini-split, baseboard heat, no heat source
  • Central a/c, mini-split, room window units
  • Yard
  • Garden
  • Pool, hot tub, sauna
  • Solar panels: paid off or leased

Note: leased solar panels can be tricky if the buyer is getting a loan and does not qualify based on the additional monthly payments on the solar lease! Be careful! Or consider offering to pay off the remaining owed at closing - if the solar company allows you to do so without penalty.

Look at the homes near you that are similar that are actively for sale and ones that sold in the last 3 months. Download the table sheet to fill out the comparison to create a Comparative Market Analysis (CMA). Add a value for each additional feature that your home has, and subtract value for things your home doesn’t have.

To determine the value of a home feature, it is very local dependent so you need to know your market area. For example, if your home backs to a busy noisy road, that will typically be considered of less value than other homes. We have seen an $800,000 home neighborhood sold for over $100,000 less because of a busy road, but on a $300,000 home the decrease in value would be a lot less. So determining the value requires knowledge of your local market and comparing your home to others nearby.

Think of it this way - if you were currently a buyer in your area, of all the homes currently for sale, why would they choose yours over the other ones available? Everyone has their own deal breakers, but then it typically comes down to price.

Typically it is not recommended to get an appraisal. Appraisals are expensive and while there is a formula used to develop an appraisal, it still comes down to the appraiser's subjective view. While a good value from an appraisal could be used in your marketing and advertising, a bad one can be a problem down the road when a buyer's lender gets an appraiser out there.

BPO Broker Price Opinion

Instead, consider getting a BPO. A BPO is a Broker Price Opinion. Essentially when you work with a real estate agent, you will get their opinion on the price based on their analysis of the comparable homes.

You can pay an agent for a BPO and they typically create something similar to an appraisal document estimating the values for differentiators of your home. 

If you are planning on hiring an agent, they will provide a CMA Comparative Market Analysis to help guide you on the value of your home. This is typically not as detailed as a BPO but does help get a good idea of how much your home will sell for in the current market. 
Note: not all agents know how to do a proper BPO. Some agents are hired by banks to create BPOs on foreclosed homes.

Costs

Appraisals can cost $400-$800 and take up to 3 weeks to complete. 
BPOs can cost between $100-$300 and typically done within 2 weeks.

Recommendation

Use the CMA Comparative Market Analysis approach for pricing your home. The detailed values on appraisals and BPOs - while they do provide insight into the value of each feature, the reality is that the current market value of a home is what a buyer is willing to pay for it. And that comes down to home features, buyer's dealbreakers, and how the home "feels" to them, and does everyone want it (high desirability).

Determining the best price to list your home is an art combining material facts and formulas, as well as the subjective opinion of what buyers think about the home.

  1. Start by narrowing down on price to a range. 
    What is the absolute max my home realistically could get in the current market? And what is the lowest price someone will definitely pay for my home (not my low point, the market's low price point)?
    For example,
    "I think my home will sell for somewhere between $800,000 and $870,000." 
    The range is too big, but gives us our starting boundaries.
  2. Ask yourself, "Do I need to sell quickly?" If so, aim a little lower and lower your top boundary price. We want someone to buy it sooner than later, and not wait for that one buyer who falls in love with our home.
  3. If you don't need to sell quickly, are you okay with your home not selling at all? This happens, where a home sits on the market for over a year because it is priced too high. Or the sellers keep dropping the price. Either way, this looks bad to potential buyers and some think something's wrong with the home or that no one wants it so they shouldn't like it as much as they do. 
  4. How much inventory of similar homes are currently listed for sale? How many competitors does your home need to beat out to have a buyer choose your home over these others? Realistically, is your home so much better than the others that someone would pay $10,000 more? $50,000 more? 
  5. Are you friends with any local agents? Ask them what they think - share your features, or photos of your home via link from something like Google Photos. This is great for two reasons: you are letting real estate agents know that you are planning on selling soon in case they have a buyer looking, and you do decide to use an agent then you made some connections and can sort of "interview" them this way. 

Ultimately you need to narrow down to a single price value to list your home. 

Action Items

At the end of this section, you should:

  • Understand the features and negatives of your home
  • Put together a CMA Comparative Market Analysis to compare your home to others recently sold and currently on the market
  • Determine a price-range of what your home will sell for in your current local market.
  • Have an idea of what you should price your home for.
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