The Science of Market Analysis
The key question most home sellers ask at the beginning of the home selling process is simple. How much is my home worth? Determining that value takes a comparison technique that matches up to your home with others in your immediate area that have recently sold with similar amenities. Any real estate agent will first develop a market analysis for your home to provide that price and the evidence behind it.
That evidence is not just to satisfy you, the seller, that a particular price is correct, but also to prove later in the process that the price was reached in a justifiable way and no one is over- or underpaying for a particular piece of real estate. However, if you are interested in selling your home, but need to know a potential selling point for making that decision, the power to do so is at your fingertips.
With the increasing use of the internet to track home sales, you no longer need to wait for a real estate agent to do that analysis for you. Multiple Listing Service (MLS) data has been the cornerstone of that analysis for many years and MLS information is now more available to consumers than ever before with its inclusion on many real estate websites.
MLS, county records and your own fact-finding can form a strong case for a particular price point that you can then use to make a decision on whether to sell or not. There is a simple set of steps you can take to determine a rough market value of your particular piece of real estate.
First, hunt down three recent sales of similarly sized homes in your area. You can do this by any method, but what you need to know are the amenities of the three homes and the final selling prices of each home. No home will be an exact match to yours, so some adjusting will have to go on and knowing the amenities will allow that to happen.
The difficult part comes in when you have to decide what particular amenities are worth in your area and most often, a real estate agent can give you the best idea of that value. However, to keep them out of the process, you can do research on the various real estate related websites that target your area (believe me, there are probably plenty) and see if you can uncover the information yourself.
With that information, take the first home sale you researched and adjust the price in relation to your house. In order to that, you add to that sale price the value of any amenities your home has that the previously sold home does not. If you have an extra bedroom, for example, add $20,000 or whatever value you determine to the sale price of that home to get an idea of what it would have sold for with your level of amenities.
If that previously sold home has a feature that yours does not, subtract the value of that amenity from the home price. These adjustments will ultimately give you an end figure that approximates what that previously sold home would have sold for it if had the makeup and features of your own home. Do this for all three properties and average the prices together to give you a rough idea of what your home might be worth on the open market.
Obviously, any appraisal is, at its best, an educated guess, so be prepared for a difference in the market value of the home when your real estate agent does his or her own calculations to determine a selling price. The best way to get an appraisal is to go through your real estate agent, but to get a rough idea on your own, this can be a good method to at least get an idea of the value of your home.