Are Realtor Commissions Negotiable?

Are Realtor Commissions Negotiable?

Are Realtor Commissions Negotiable?

the impact of coronavirus on the real estate market and home prices, home value estimate app

There are a lot of costs associated with buying or selling a home. In particular, closing costs like legal and home inspection fees get a lot of attention and for good reason. The average homebuyer in the U.S pays $4,876 in closing costs. While it’s important to be aware of closing costs, the largest cost associated with any real estate transaction is the commissions paid to the real estate agents. Many people believe realtor commissions are set in stone. What your realtor does not want you to know is that these commissions are negotiable.

What is the standard real estate commission?

Real estate agents get paid a commission when the sale of a home is finalized. Typically, this commission is 6% of the sale price of the home. This commission is paid to the agent representing the seller, who then splits the commission with the agent representing the buyer.

The realtor commissions on the sale of a $500,000 house would typically be $30,000. This $30,000 comes off the $500,000 sale price leaving the seller with $470,000 after commissions are accounted for.

Since the commission is taken from the sale price of the home there is a common belief that the seller pays the full cost. However, realtor commissions are factored into the sale price of a home. This drives up the price that the buyer must pay for the home. In this way, buyers indirectly pay for realtor fees even if it is the seller who signs the check.

Realtor fees rise with home prices

Since most realtors collect a flat 6% commission, their compensation rises and falls with the price of real estate. As you are probably aware real estate prices have been rising dramatically over the past 10 years. The hotter the market, the more you pay in realtor fees.

If you bought a house in Nashville in 2012 you would have paid about $10,000 in realtor commissions. If you sold that same house today, you would pay nearly $21,000 in realtor commissions. The realtor does the same amount of work on the deal today as they did in 2012, but they collect over twice the commission.

If you are happy paying that amount of commission when you buy or sell a house, then read no further. If you want to discover an easy way to save thousands of dollars in realtor commissions, keep reading.

Real estate commissions are negotiable

The standard 6% commission has become so ingrained in society that many people believe that there is some sort of law mandating a 6% commission fee. This is not true! No law says that real estate commissions need to be 6% of the selling price. All real estate commissions are negotiable.

Just because realtor fees are negotiable does not mean realtors are compelled to lower their commission below 6%. It is your legal right to ask a real estate agent to lower their commission. The realtor is free to refuse your request–which most do.

Are there any other options?

A model that is quickly gaining popularity is the 1% commission. Under this model, the listing agent only charges a 1% commission fee instead of the typical 3%. With the 1% model, it is still recommended that you offer a buyer’s agent a 3% commission to incentivize them to show your home to their clients.

This model is made possible due to technology which has made the job of a real estate agent much easier. Since technology has made the listing process more efficient, many real estate firms are passing their savings onto the consumer.

How much can you save with the 1% model?

Let’s say you wanted to sell your house for $500,000. If you used a real estate agent at a traditional brokerage, you would pay $30,000 ($500,000 X 6%). This $30,000 would then be split between the listing agent and the buyer’s agent.

If instead, you decided to use Felix Homes, you would pay $20,000 ($500,000 X 4%). Of this $20,000, $5,000 would be paid to Felix Homes and $15,000 would be offered to a buyer’s agent. By using Felix Homes, you would save $10,000.

What could you buy with $10,000?

If you want to have your mind blown, consider this. If you took $10,000 and invested it, after 30 years you would have more than $100,000 assuming an 8% average rate of return on your investment. If you don’t think that is a life-changing amount of money, consider the fact that the average 401k balance of Americans between the ages of 60-69 is $195,000. If a 35-year-old invested the $10,000 in savings and never saved another dime, they could have more than half the amount of money in retirement savings than the average American.

When it comes down to deciding whether to use a Traditional agent or Felix Homes, think about the true cost of those commissions and ask yourself if your realtor is providing enough value to justify those commissions. If they aren’t perhaps it’s time to consider another option.

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Do I have to pay my mortgage during the Coronavirus pandemic?

Do I have to pay my mortgage during the Coronavirus pandemic?

Do I have to pay my mortgage during the Coronavirus pandemic?

Do I have To Pay My Mortgage During The Coronavirus Pandemic, small house and a calculator

There is no doubt that the economy has taken a hit from the Coronavirus pandemic. Nearly ten million people lost their jobs in the last two weeks of March. While they might not be facing foreclosure yet, they are struggling to make their mortgage payments and their savings are dwindling each day.

Does my lender still require I pay my mortgage?

Thanks to the recent actions made by some of the largest banks, you can likely breathe a small sigh of relief. Banks are working with their clients to offer flexible solutions such as mortgage assistance programs and home equity lines of credit (HELOC).

Below is a list of banks and the associated mortgage assistance program they are offering due to the COVID-19 pandemic.

Ally Bank: Offering payment deferral for up to 120 days with no impact to your credit on home loans for customers affected by COVID-19.

BB&T: Offering mortgage forbearance for a minimum of 90 days for customers impacted by the current crisis.

BMO Harris: Offering payment relief options on mortgages, home equity, loans and credit cards. Contact BMO Harris directly for more information.

Charles Schwab Bank: Offering customers with mortgages or home equity lines of credit through Charles Schwab Bank and Quicken Loans can request payment relief for up to 90 days.

Chase: Offering assistance with mortgage payments. You must call 800-848-9380 for more information.

Citi: Offering various hardship programs for eligible mortgage customers. Call 1-855-839-6253 for more information.

Comerica Bank: Offering loan deferrals on various lending products. Call 888-444-9876 to discuss options for residential mortgage loans.

East West Bank: Offering temporary mortgage payment relief options for those who are unable to make their mortgage payments due to a disruption of income related to COVID-19.

Fifth Third Bank: Offering 90-day payment forbearance with no late fees on mortgages and home equity loans.

HSBC: Offering financial assistance programs to help with customers’ mortgage or home equity loan payments who have suffered financial hardship. Call 855-806-4657 for more information.

Huntington National Bank: Offering up to 90 days of payment deferral on all consumer loans, including residential mortgages, for those experiencing financial hardship as a result of COVID-19.

M&T Bank: Offering mortgage and home equity repayment assistance to customers whose income has been reduced due to COVID-19 impact.

New York Community Bank: Offering 90-day residential mortgage payment forbearances for customers whose income has been negative impacted by events linked to COVID-19.

PNC Bank: Offering to postpone payments for up to 90 days with no late fees for customers with mortgages or home equity loans, among other lending products that are eligible.

Regions Bank: Offering consumer mortgage payment relief upon request for 90 days for those negatively impacted by COVID-19.

SunTrust: Offering mortgage forbearance for a minimum of 90 days for customers impacted by the current crisis.

TD Bank: Offering payment deferral program for mortgages and home equity loans or lines of credit, as well as waiving late payment fees on each type of home loan product.

Union Bank: Offering assistance with your mortgage or home equity account. For more information, called 800-237-0561.

U.S. Bank: Offering a payment forbearance up to 90 days with no late fees on mortgages for those negatively impacted by the current crisis.

Webster Bank: Offering options for payment deferrals on mortgages, home equity or personal loans, and small business loans, based on need. Webster is also putting in place a 90-day moratorium on foreclosure of residential loans.

Wells Fargo: Offering payment deferral plans for customers with mortgages, credit cards, auto loans, small business loans and personal loans who have been impacted by COVID-19.

What if I’m already at risk of missing a mortgage payment?

If you think you are at risk of missing your mortgage payment, you should call your lender today. They can work with you to develop a personalized gameplan that fits your situation.

Most lenders are willing to be flexible and many have suspended foreclosures and evictions during the coronavirus outbreak.

Why? They know that they will be helped out by money made available through federal legislation. Also, during these tight times, they would rather stay with an existing client than try to find a new buyer. Use this circumstance to your benefit, to give yourself space and time to get back on your feet without losing your home.

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Top 5 Tips for Selling Your Home This Holiday Season

Top 5 Tips for Selling Your Home This Holiday Season

Top 5 Tips for Selling Your Home This Holiday Season

Selling Your Home Over The Holiday Season, Nashville home decorated with Christmas lights

To a prospective home seller, the “most wonderful time of the year” may seem like the absolute worst time to put a home on the market—but it doesn’t have to be.

Despite its challenges, the holiday season can offer a major competitive advantage for home sellers—a less crowded market makes a home stand out.

“In the winter months, inventory tends to be 20 percent to a third lower,” says Lawrence Yun, chief economist for the National Association of Realtors. “Home sales are definitely cyclical following seasonal patterns.”

PRO TIP: See the latest Nashville homes for sale!

So, home sellers, don’t give up just yet—there’s still time to make this year count. Here’s what we suggest:

1. Be conscious of your holiday decor.

Selling Your Home Over The Holiday Season, Nashville house with Christmas decorations

Before you deck the halls, ask yourself: Will this distract potential buyers?

The answer is most likely yes. Like it or not, the key to home staging is to make your home feel as neutral as possible so buyers can easily envision where their belongings could go. On top of that, there’s no question that decoration preferences can vary widely from person to person—especially when religion is involved. Although you may adore your life-sized Santa or dreidel (you get the idea), it could end up distracting or turning off prospective buyers.

Our advice: Save the decor for next year. It will look just as good in your new home!

PRO TIP: Thinking about selling? Check out this prep-list to make sure your house is in market-ready condition.

2. Make the weather work for you

Selling Your Home Over The Holiday Season, Nashville home with snow on the roof and in the yard

The weather outside is frightful, but that doesn’t mean your home should be, too.

Clean up any snow, mud or seasonal debris that ends up indoors, and keep your thermostat at a comfortable setting. No one wants to shiver (or sweat) their way through a house tour.

Same goes for outdoors. Remember that bare winter trees are more revealing, so don’t hesitate to touch up any areas of your home that may look shabby. If it snows, keep your lawn tidy to help the wintry aesthetic work in your favor. And definitely, don’t forget to shovel and ice walkways so visitors can safely enter your home.

Finally, consider showing off your home at other times of the year. If your home looks killer in the summer, dig up a photo and make it readily available for buyers.

3. Social media is where it’s at

Between end-of-year deadlines and holiday festivities, December is a busy month for everyone. As a result, you’ll probably have fewer in-person showings—but this isn’t necessarily bad.

According to the National Association of Realtors, 44 percent of home buyers in 2016 looked for properties online first. And since humans are inherently visual, there’s no question that photos (or videos) are the first thing prospects will notice. To stand out, consider hiring a professional photographer or videographer to capture a full tour of your home. Boost its visibility wherever you can, using local sites and major social media outlets like Facebook, Instagram or Twitter.

PRO TIP: See how we market a listing at Felix Homes

Selling Your Home Over The Holiday Season, a person cleaning a cat's litter box

4. Minimize odors — including those fresh baked cookies

Always, always, always eliminate any foul-smelling items (or animals) from your home. Your home should be inviting, not insulting.

On the flip side, it’s equally wise to lay off the “bonus” scents. Although you may love your scented candles, prospective buyers may not. Same goes for the smell of freshly-baked cookies or bread. When in doubt, blow it out—or bake it when they’re gone.

PRO TIP: Check out this home selling tip you can’t afford to miss.

5. Price to sell, not to steal

Think you can give the Grinch a run for his money? Think again.

It’s unlikely you’ll come away with a holiday “steal” by selling your home at an unrealistically high price. The drop in home inventory favors buyers with the best deals expected in November and December.

At the same time, the market can also be advantageous to sellers—so long as you choose a competitive listing price. Why? If you set your price too high, you risk losing buyers that end up waiting until the new year. Keep it reasonable, but not too low…now is not that time of year to outplay market data.

PRO TOP: Click here to see what the top three valuation companies think your home is worth.

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Pricing Your Nashville Home Like a Pro

Pricing Your Nashville Home Like a Pro

Pricing Your Home
Like a Pro

Pricing your Nashville Home, two potential buyers discussing with a realtor

Pricing your home correctly is probably the most important aspect of the home-selling process. List it too high and you won’t get any interest from buyers, list it too low and you risk leaving money on the table.

There’s a lot of misinformation about how to price a home correctly and a lot of Realtors use the age-old trick of telling you what you want to hear, even if it’s not in your best interest. Let’s take a closer look at how to price your home to sell quickly all while ensuring you’re not leaving money on the table.

The Goldilocks Price: Not Too High, Not Too Low

Pricing your home correctly requires compromise. At the end of the day, a home is worth what a buyer is willing to pay for it. Price your home too high and buyers will overlook it. This is a big mistake a lot of homeowners and Realtors make. After all, interest in a home’s listing trails off sharply after about three weeks. That’s only 21 days!

Pricing your home too low could cause just as disastrous results. Yes, you will likely sell quickly but you may be leaving tens of thousands of dollars on the table. It’s no secret that the goal of any respected Realtor is to help you price your home in the goldilocks range but not all Realtors are created equal.

Using Data and Algorithms to Get an Estimate

Like I said, not all Realtors are created equal when determining a strategy for pricing your home. Some will cherry-pick what they tell you are ‘comparable homes’ or comps and others will seemingly pull a number out of thin air.

PRO TIP: Compare the services and fees of selling with Felix Homes vs. a Traditional Realtor.

At Felix Homes, we rely on large data sets and advanced algorithms to get a rough estimate of what your home is worth. This method is called an ‘Automated Valuation Model’ or AVM and it’s a program that uses linear and multiple regressions to form an estimate of the property’s market value. Data analyzed can include the age of a home, market values, trends, historical data, property features and more.

PRO TIP: Click here to see what the top three valuation companies think your home is worth.

There’s No Replacing the Human Element

Once we have a rough estimate provided by the AVM, it’s essential that we visit the home and get a sense of certain features that an AVM cannot analyze. For example, while AVMs are great at comparing thousands of past sales, there is no way for it to judge the condition of your particular home’s interior.

At Felix, that’s where our Home Selling Experts come into play. They’re trained to evaluate the condition of your floors, see if you have any scuffs or marks on your walls, learn what kind of countertops you have in your kitchen and find out if you have high-end appliances. In all, there are well over 150 criteria that our Home Selling Experts look for to help refine the value of your home.

PRO TIP: Schedule a no-pressure consultation with a Felix expert today.

Computer Algorithms + Human Element = Perfect Price

Now that your Felix Home Selling Expert has visited your home and knows the unique features and conditions of your property, their goal is to incorporate this knowledge and modify the value range that the AVM provided. For example, if you have granite countertops and walk-in closets, your home’s value will be adjusted up but if your home is also located on a main road and you don’t have a garage, then your valuation will be adjusted slightly downward.

Common Mistakes Home Owners Make

  • 1. Thinking the Zillow Zestimate is the value of their home. Yes, the Zestimate is a type of AVM and it can be a good estimate (in some cases) of what your home is worth. That said, there is no substitute for having a trained real estate professional visit your home for an in-depth valuation.

  • 2. Thinking that the $20,000 renovation you did last year means your home should be worth $20,000 more. Renovations, additions, and customizations are nice. They’re what makes a house a home. That said, many renovations do not produce a positive ROI or Return on Investment.

  • 3. Thinking your home is worth $350,000 because your neighbor’s home sold for $350,000. While these types of ‘comps’ can provide a good estimate, just because your neighbor’s home sold for $350K doesn’t mean your home is worth $350K. A home should be judged on a price per square foot basis so if your neighbor’s home sold for $120/sqft., your home may be worth $120/sqft. give or take.

  • 4. Thinking your home is worth $30,000 more than it actually is. A lot of homeowners will overestimate what they think their home is worth. This is typical because the owner is attached to their home and who can really blame them? It’s like having a dog that is terribly ugly but in the eyes of its owner, it’s the cutest dog in the world.

  • 5. Thinking your home is worth $500,000 because it’s insured for $500,000. Insurance companies have their own way of determining the value of a home and in many cases, it’s pretty similar to market value. That said, when selling your home, you’re entering into a market and like any good or service in a market, it’s only worth what someone is willing to pay for it.

As real estate experts, we know the process of selling your home can be stressful, especially if you don’t know how you (or your agent) priced your home. At Felix Homes, we combine computer algorithms with the human element to determine an accurate value for your home that will help it sell quickly and ensure you are not leaving a single penny on the table.

PRO TIP: Learn how you can save $15,000 in Realtor fees with our 1% commission.

Let’s chat today.

 

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Home Selling Tips: Home Repairs Before You List

Home Selling Tips: Home Repairs Before You List

Home Selling Tip: Home Repairs Before You List

Home Repairs Before You List, inside of a beautiful house

Welcome to part two of Felix Homes’ Guide To Selling! Would you go to the dentist without brushing your teeth? Would you go to a waterpark without bringing a bathing suit? So, why would you try to sell your home without completing the necessary prep work?

Preparing your home for sale is a key step in making sure you get the highest price. I’m not talking about major renovations but small, weekend projects or minor repairs are a quick and easy way to ensure your home will get multiple high-priced offers. Here are eight easy fixes to boost your home’s appeal:

1. Repainting Dirty or Dark Walls

Home Repairs Before You List, repainting dirty or dark walls

Walls scuffed or dirty? Are they painted a ‘unique’ or dark color? Painting certain rooms that need a little TLC is one of the easiest ways to ensure prospective buyers leave with a good first impression. Make sure it appears professionally painted (even if it wasn’t.) Choose light, neutral colors which will brighten your interior and make the house appear larger.

2. Front Door and Entrance

Home Repairs Before You List, front door and entrance

When a prospective buyer comes to tour your home, one of the first things they notice is the front door and entrance. The entrance is undoubtedly one of the most important aspects of your home so, now that you’re a painting pro, consider repainting the front door while you’re at it.

PRO TIP: Avoid these 5 home improvements that will actually lower the value of your home.

3. New Carpet

Home Repairs Before You List, new carpet

Carpet stained or dirty? That’s no way to make a good first impression. Consider renting a heavy-duty carpet cleaner or, if your carpet is too far gone, you should replace it altogether. The carpet should look new, clean, and shouldn’t contain any stinky odors. If you’re going to purchase new carpet, be sure to choose a light color as it will help brighten up the interior.

4. Hardwood Floors

Home Repairs Before You List, hardwood floors

Now that the carpet is fixed, take a look at your hardwood floors. What condition are then in? Hardwood floors are one of the most popular flooring selections in a home and can be a major selling point. Make sure your hardwood floors are looking their best. Refinishing your hardwoods when they need it can totally change how a buyer views your property. There is nothing like entering a home where the hardwood looks spectacular. The great thing about refinishing hardwood floors is the return on investment which is very high.

PRO TIP: Learn how to save $15,000 in Realtor commission fees when you sell.

5. Kitchen and Bathroom Fixtures

Home Repairs Before You List, kitchen and bathroom fixtures

Does your kitchen or bathroom look outdated? Now, I promised there wouldn’t be any major renovations so a completely new kitchen or bathroom is out of the question. That said, there are a number of tricks you can do to update your kitchen or bathroom on a budget. Consider repainting the cabinet doors or replacing the handles for an updated look. You may even want to replace sink fixtures for that brand-new look.

6. Brighten-Up Your Home

Home Repairs Before You List, brighten-up your home

I can not stress how important a bright home is. An easy way to add some much needed light is to replace all of your light bulbs with modern LEDs. Also, ditch the heavy drapes for light colored curtains that let the sun in.

7. Yard and Exterior

Home Repairs Before You List, yard and exterior

Don’t forget the exterior. Your yard can be a big selling point and is not something that should be overlooked. So, replace missing fence boards, add sod if your grass is looking a little bare and clean up any junk that may have accumulated in the yard or on the outside of any storage sheds. Your lawn should be mowed before someone comes to view the home. Also, feel free to plant some flowers to add color and make the yard more attractive.

8. Minor Repairs

Home Repairs Before You List, minor repairs

Complete any minor repairs that need to be taken care of. I’m talking about leaky faucets, loose doorknobs, clean windows. Everything doesn’t have to be brand new for a home to be desirable to buyers, but all the functional aspects of the home must be in good working order to fetch the best price. A few broken components are all it takes to start driving the price down, so get them fixed.

PRO TIP: Want to sell your home fast? It’s all about curb appeal.

Why Sellers Need A Comparative Market Analysis

Why Sellers Need A Comparative Market Analysis

What is a Comparative Market Analysis (CMA)?

Comparative Market Analysis, house for sale

If you’re considering selling your home in the near future, you’ve probably started thinking about how much you could sell it for. While you may have tried out some online home value estimators like Zillow Zestimates or even the Free Home Value Report found on our website, most of these tools won’t provide you with the most accurate estimate of your home’s value.

Although these estimates are often a good starting point, they shouldn’t be taken at face value. This is because their algorithms only take into consideration the data that’s available to them, while overlooking critical factors like your home’s condition, unique features, and location that only a human can evaluate.

In reality, the best way to determine how much your home is worth is by conducting a Comparative Market Analysis or CMA. To do this, you’ll want to work with an experienced Realtor who understands your local market.

PRO TIP: Schedule a free listing consultation + CMA with Felix Homes.

What is a Comparative Market Analysis?

A Comparative Market Analysis is a method of estimating a home’s value based on recent sales of similar properties in the same area. The CMA is a tool used by real estate agents to help them determine what a property is worth. They do this by assessing the features of your property and finding “comps” or comparable properties that are similar to your own.

It’s important to note that a CMA is just one method for determining a property’s value. There are two other methods that are also used: Replacement Cost and the Income Approach. Generally, the Replacement Cost method would be used for historic homes where the cost of the materials is very high or new construction homes where the costs of the materials are known. The Income Approach is typically used for investment properties and estimates the value of a property based on the income it generates.

What should a Comparative Market Analysis include?

When all is said and done, a Comparative Market Analysis will likely include at least three to four comparable properties. These properties should share similar features to your own home, have recently sold, and be in close proximity to your home. The analysis will include the sold price of the properties along with a proposed listing price for your property. Some agents may also include other market data including days on market and pricing trends.

PRO TIP: Learn about the top ways to sell your Nashville home.

Comparative Market Analysis, real estate agent presenting a home to new potential buyers

Can you get a Comparative Market Analysis for free?

Most agents will provide this service for free and it can be a great way to get a sense of an agent’s work before you sign up to work with them. If you understand the different components that go into creating a Comparative Market Analysis, you’ll be able to pinpoint the agents that really know their stuff when it comes to your neighborhood and the local market.

If you’re using a comps analysis as a way to interview an agent, be wary of choosing an agent solely because they provide you with the highest price. Sellers who do this usually come to find out the number wasn’t accurate, to begin with.

PRO TIP: See how you can save $15,000 in Realtor commission fees

Is Comparative Market Analysis accurate?

A Comparative Market Analysis is a great tool for real estate agents to determine a home’s current market value. Although they are often very accurate, it is not a guarantee that your home will sell at the price provided to you in a CMA.

The accuracy of the CMA relies heavily on the comps that are chosen. Different comps will bring about different results. That’s why it’s so important that the comps are as similar as possible and adjustments are made for unique features. This will bring about the best results. Even still, the market is always changing and the sales price of your home will likely differ from the price you asked for.

How do you calculate a Comparative Market Analysis?

To calculate your home’s value, you’ll want to seek the help of a licensed Realtor who understands the nuances of your local market and can provide you with an accurate estimate of your home’s worth. When conducting a Comparative Market Analysis, a Realtor should take the following steps:

1. Create a list of your property’s features:

In order to find comparable properties, a Realtor will first start by identifying the basic features of your property, including:

The location (zip code, neighborhood, and/or subdivision)

  • 1. Square footage

  • 2. Number of bedrooms and bathrooms

  • 3. The lot size

  • 4. Year built

  • 5. School district

  • 6. Specific features (swimming pool, garage, etc.)

Once they have a good idea of these features, they’ll move on to assessing the overall location of your property.

Comparative Market Analysis, beautiful neighborhood

2. Assess your neighborhood:

The location of a property largely impacts its value. Properties located in close proximity to popular shopping centers or within a highly sought after school district will add value to the home, whereas properties close to a railroad or highway may decrease its value. An agent should get an idea of your neighborhood and the surrounding area before they start searching for comparables.

PRO TIP: See the latest homes for sale near you.

3. Assess your property’s condition:

Aside from assessing your neighborhood, a good Realtor will take the time to visit your property in-person. A walkthrough of your property will allow them to get a clearer picture of your home’s overall condition–a factor that will affect your home’s value.

PRO TIP: Did you know Felix offers every home seller a complimentary property visit? Schedule your property visit now.

While touring your property, an agent should take note of any additions or upgrades you’ve made to your home, as well as any items that may need to be updated in the near future. Both the interior and exterior of your home should be taken into account. Other amenities, such as a gated community or proximity to desirable shopping or dining areas, should be considered.

4. Gather comparable properties:

Once your property has been assessed, a Realtor will begin the process of finding comparables. Most real estate agents will use the local MLS to find comps. The MLS, or Multiple Listing Service, is a members-only site that can only be accessed by agents who are a member of their local association of Realtors.

When conducting a Comparative Market Analysis, an agent will look for homes that have recently sold and share the following similarities with your home:

  • 1. Same number of bedrooms
  • 2. Same number of bathrooms
  • 3. Same number of stories
  • 4. Similar square footage (within 200 sqft of your home’s square footage)
  • 5. Similar price per square foot
  • 6. Similar lot size
  • 7. Similar location (located within a quarter-mile of your property)
  • 8. Similar features and upgrades (pool, garage, etc.)
  • 9. Same zip code and school district
  • 10. Built around the same time

5. Average the price:

Once they’ve found recently sold homes that fit the above criteria, they’ll typically present you with at least three comparables. The more comps, the better, but three properties is usually a good rule of thumb.

Now, are you ready to do some math? First, the agent will calculate each comps’ price per square foot. This is done by dividing its sales price by its square footage. Next, they’ll determine the average price per square foot of all the comps. Lastly, to calculate your property’s estimated value, they’ll multiply the average price per square foot by your property’s square footage.

6. Make adjustments:

After an agent has come up with an estimated sales price for your home, they’ll revisit any unique features and adjust the price, if necessary. For instance, if none of the other homes have a bonus room, they may adjust the price to reflect this feature.

PRO TIP: If you’re considering making upgrades to your home, it’s important to know that the cost of the upgrade may not equal its value. For instance, if you invest $50,000 into putting in a pool, you likely won’t get that $50,000 back when you sell your home. A more realistic return on investment for a pool is $10,000. Curious what other upgrades might not get the return on investment you were hoping for?

PRO TIP: Check out these 5 home improvements that actually lower your home’s value.

Let’s chat today.

 

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