Fair Market Value
You are considering selling your Newport Coast home, and would like to determine the fair market value of the property. There are many considerations you need to be aware of when it is your “own” home as you selected it, you made improvements to it, and spent time with your family in that home so of course there will be emotional attachments.
Given that there may be emotional investment and attachment to the home, it may be difficult to be objective or realistic with regards to the “actual fair market value” of the home.
What that means is you need to put yourself in a a buyers shoes. What does a buyer see when they walk in the door? A great way to get yourself thinking like a buyer is to act like a buyer. Go to open houses, look and see how the homes show, what do you notice? How does the home show?
It is imperative that you are objective so that you can establish fair market value and determine what someone else would pay for your house. This means that you have to abandon your emotional attachment to the home as I discussed earlier.
Obtain Current Comparable Market Analysis from your Newport Coast Real Estate Agent
When looking at comparable sales, you must consider all the sales over a specific time frame. I typically look back as far as six months to review trends, however for a CMA I will go back four months to establish comparable sales. An appraiser will most likely only go back four months. Consider all the sales including distressed property sales (REO sales and short sales) as they are real comparable sales. Look at original list price to sales price. If the home has a high number of days on market, was it because it was the property was priced above market value?
And a word of advice, do not take it personally. No one is trying to say your home is worth less than you think it is, it is important to be realistic with setting the price correctly right from the beginning. If not, you are taking the risk of chasing the market down. Ultimately, you will end up with less money. And, an agent who over prices a home to get the listing may be doing you - the seller a disservice.
Take into Account Current Market Conditions
What is the unemployment rate? How is the economy in general in your city, the state and the country in general? Any new laws pass which may influence the economy? What are interest rates doing now? These are all factors which affect the housing market. If the economy is unstable, that influences whether or not buyers will buy and want to make the investment. Buyers become more cautious with their money and not sure about investing when the economy is down. So – that means less buyers in an unstable economy.
Look at the absorption rate of the market as well. The absorption rate is basically the amount of time the housing market will absorb the homes available on the market. That can be determined based on active listings in a specific area, and sales by month.
At the end of the day, the fair market value of a home is determined by the general economy and based upon recent comparable sales. Seller sets the price along with feedback from your Real Estate agent, make sure you are being objective!
If I can answer any questions about determining fair market value, please contact me.
Originally posted at NewportBeachRealEstateCafe.com