When estimating a fair selling price for your house, you should determine its approximate current market value by looking at other properties in your community that have recently sold. While a buyer may offer more for your house than what it is actually worth in today’s market, the buyer will have difficulty purchasing the property if it appraises for less than the offer price. The appraiser uses data from recently sold properties in your area when determining your home’s value. Pricing your house at a fair selling price reduces the chances of a failed appraisal and a lost sale.
Locate similar houses to yours in your neighborhood or similar nearby neighborhoods that have sold within the last six months. Solicit the assistance of local real estate agents for data or interview your neighbors.
Select the three houses best matching yours of the resent sold properties you located. Choose properties most similar in age, similar size (within 200 square feet of yours) and similar design and amenities to yours.
Adjust the final sale price of each comparable property to compensate for the differences between your house and the comparable one. For example, if the comparable has a swimming pool and yours does not, reduce the final sale price to compensate for the pool’s value. If your house has the pool, and not the comparable house, increase the final sale price. The amount you adjust is less than the initial cost of the swimming pool and reflects the value of the amenity to local buyers. This amount can vary by region and local customs.
Average the adjusted sale prices of the three comparable properties to determine a fair asking price. For example, if the three adjusted sale prices are $100,000, $110,000 and $90,000 the average is $100,000.
- "Modern Real Estate Practice"; Galaty, Allaway and Kyle; 2006
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