How Much Is My Home Worth?
Automated Valuation Models - Determining Your Home's Value
You've decided you're ready to sell your home. Being the prudent seller, you want to know out how much your home should fetch in today's market. Should you do this alone or seek the advice of an experienced professional?
Most people are aware of Zillow's z-estimate valuation tool. Do a Google search for any residential address and chances are you'll find a Zillow home estimate for that address. You may find others as well. These are called Automated Valuation Models, or AVM. While an AVM can be a good place to start, you'd be wise to seek further guidance from someone who can give you a more accurate understanding of your home's value and the market conditions for your home.
Let an Experienced Realtor Help
Realtors have at their disposal a better, more powerful and more accurate tool for the task of pricing homes. It's called a Realtors Valuation Model, or RVM®. The RVM is an AVM but with more tools and better data. The following definitions may help to differentiate the two:
AVM = Automated Valuation Model - a value estimate calculated using publicly available information
RVM = Realtors Valuation Model - a value estimate calculated using publicly available information plus MLS active, sold and off market data
Because it pulls directly from the MLS, the RVM has the most data and the most up to date data, allowing for the highest accuracy of any valuation product available.
It Doesn't Stop There
As a product of Realtors Property Resource®, a product available to Realtors, the RVM allows agents to dig in even deeper. Agents can make adjustments due to improvements of the home or account for changes such as the square footage of the home. Furthermore, agents can filter out homes that are dissimilar to the subject home. A 4/3 home in good condition, for instance, may yield a considerably higher price per square foot than the neighbor's 2/1 home built 20 years prior and in need of repair. By comparing homes similar in size, age and condition, an experienced agent can give you a more accurate figure in terms of your home's value. This is what's known as a comparative market analysis, or CMA.
One More Thing - Appraisals
Now that you've got your comparative market analysis, you can begin the process of selling your home. If you want your home to sell, be realistic when setting an asking price. Consumers are smart and are looking for value. Homes with an unrealistic asking price tend to sit on the market longer and may eventually expire without a contract or without even a single offer. Also, keep in mind that an appraisal will likely be done prior to the closing. If the appraisal does not meet the terms as set forth in the contract and/or any appraisal contingencies, the contract price may need to be adjusted in order to close the sale.