Take the Mystery Out of Home Prices.

It's always interesting to talk with people about the price of their home. It's usually a tedious subject because the homeowner often already has a price in mind. Perhaps they know of one down the street that sold for a high amount, or they've been renovating and need to price it high enough to make a profit. Sometimes they just want to get enough to pay back numerous home equity loans.

These methods may make some sense, but they may also be totally inaccurate. The prices for homes in the United States, like most other products, are based on supply and demand. When there are lots of buyers demanding a home on your street (with limited supply) the prices will go up. However, if no one wants to live on your street the prices will drop.

Even though the press may report home sales stats like the daily Dow Jones average, local home price trends typically move slower and even tend to lag behind large economic changes. When the changes do happen they may be felt most in the luxury market as opposed to those in the the lower price ranges due to a more steady demand for housing a these prices.

So, how do you really know what your home is worth? Good question. Here's the answer: It's worth whatever someone is willing to pay for it.

Before you say that was a stupid answer let me explain. Your homes value is not based on what you spent on repairs or how much you need to buy your next home. It's based on recent comparable home sales in your neighborhood.

For a Realtor to research this we use what's known as a Comparative Market Analysis, or CMA. We can pull historical data for all the surrounding homes that have sold recently and get an average price per square foot. Using the square footage of your home we can get an estimate of what your home may be worth.

To go further, we'll look at those homes and pick out the ones that are most like your home. These are called "comparable homes". If you live in a subdivision where all the homes are the same basic size and floor plan, this is pretty easy. However, if you live in a historic neighborhood where every home is unique and of varying size, it may be more of a challenge.

This is where a Realtor's experience and opinion come in. The CMA is the starting point. It shows you the cold, hard sales data to get the price in the right ballpark. Then, based on the unique selling features of a home and your specific wants and needs, the final price is arrived at.

Of course, the home seller ultimately decides on the price. These are all tools to aid in that decision. When actually preparing to list a home for sale, I will go much deeper into this process to really understand the neighborhood trends and what buyers are wanting. I'll have to get into this on another day.

Intrigued? Interested in what your home may be worth? Click here to request a Free Home Value Report.

Peter

www.NashvilleCityHomes.com
REALTOR. City Home Specialist.