This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.
Q. We are going to be selling soon and have been following the sales in our neighborhood. The homes currently on the market don’t seem to be priced as high as the homes that sold earlier in the summer. Which listings should we be looking at to determine the current value of our home?
A. This is an interesting real estate market we find ourselves in right now. Typically you can generalize the conditions of a market based on a steady plateau, incline or decline. This year has seen a lot more ups and downs when it comes to home sales. Some months have been much better than others as well as certain neighborhoods and price categories. My point is that you need to be looking at both the most recent sales and current listings to determine your home’s value in this market.
Most homeowners and agents look at the last six or 12 months of home sales to determine a home’s value. In this market, I have tightened my threshold to home sales within the past three months because of all the market fluctuations. I am also paying very close attention to any homes currently on the market and under contract.
The benefit of data from sold homes is that you are seeing what the market was willing to bear for comparable properties. You know exactly how many days it took to go under contract and if they had to adjust their price at any time. The photos and description will also provide clues as to how the home compares to yours and what adjustments you need to make in your comparison.
By factoring in active home listings, you can gain insight into the most current market activity. You can also visit the homes to see exactly how they compare to yours. You just have to be careful about how you evaluate the price. Just because someone is listing for more than the last house that sold, does not mean they will get it. As you can imagine, some sellers can be overly optimistic about their list prices.
The process I follow to determine a home’s value, starts by evaluating recently sold homes. I use this data to establish an initial baseline price that I think the home is worth. I then take that number and fine tune it with the current and under contract listings.
I evaluate my baseline number against the other homes currently for sale in the area. I usually look at active listings $50,000 above my number and $50,000 below my number. If it looks like there are some homes currently priced for less than my number that compare favorably, then I may need to adjust down. If it seems like we compare favorably to homes priced higher, then I may want to adjust up.
Then, I’ll look at the most similar homes to my subject property. If they are having a hard time selling for the number I was hoping to shoot for, then this information is insightful about the experience we may have on the market at that price. Conversely, if there are similar homes that went under contract quickly at my number, then maybe we should push for a higher price than they were asking for.
Lastly, it is important to take into consideration what I am experiencing with nearby listings I have active in the market. This is where it becomes important to work with a local area expert. I’ll also consider any upcoming criteria that may affect our listing (i.e. seasonality, interest rate hikes, buyer trends).
Pricing homes is much more of an art than a science. Take a look at all the information you can get your hands on. I know it is tempting to take the easy route and base your price off of Zillow or, even worse, your tax assessed value. Please don’t do that. You run a huge risk of pricing too low and leaving money on the table or pricing too high and having to chase after the market. Either situation will cost you thousands of dollars.
The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.
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