When selling your Seattle area home, the goal is to price it “exactly right,” meaning high enough to not leave any money on the table, but not so high that you overprice and place it out of reach of its true target market.
The real estate market usually works very efficiently; homes that are priced low compared to their true market value typically sell very quickly, and homes that are priced above their market value tend to stay on the market. “Market value” simply means the amount a typical, well-qualified buyer in your target market is willing to part with in order to own the property. It is your home’s real worth in the current market.
Determining Your Home’s Market Value
To determine what your home would sell for in the current Seattle area market, we look at competing comparable homes, pending and closed sales of comparable homes, historical seasonal housing market trends, and present-day economic events. The review of comparable homes is called a Comparative Market Analysis, or CMA. I prepare it, and we go over it together. While the data gathering and interpretation is easier for me because I have years of experience doing it, the final result and my price opinoin should be easily understandable and clearly make sense to you as well.
What do “Sold” homes tell us?
Comparable homes that have sold within the last three months are very useful in determining your home’s value because we know how much they actually sold for, and how long they were on market for first. Until a sale closes the price that the sellers accepted is undisclosed unless the listing agent decides to part with that information, which in general they do not.
What do “Pending” homes tell us?
When a home is pending we don’t know at what price the seller accepted an offer, but we can at least see how long it was on market prior to going pending, and at what price it received an acceptable offer. (This doesn’t mean that the accepted offer was close to list price; however, the shorter the market time, the more likely this is.)
What do “Active” Homes tell us?
Comparable homes that are still on the market after around 30 days in the Seattle area market can be used as data points for prices that are probably too high. This is especially true after the 45 and 60-day points. Homes that have only been on market for 10 or 15 days tell us less because we don’t know if they will go pending in one day or 120 days.
What’s a Good Comparable Home?
A good comparable property is one that is similar to your home in size, features, and location. Ideally it will be in the same local area or subdivision. A second category includes comparable homes that may be further away, but that have enough similar qualities that buyers considering your home would be looking at those homes as well.
If your home is a condominium, units within the same complex provide the best comparables. Pricing tends to be somewhat complex-specific, so there’s less information to be gained by looking at units in other complexes, although those are still helpful.
Seasonal Housing Market Factors
We also take into account seasonal fluctuations that affect prices. For example, when pricing a home in February, the “Sold” data reflects homes that went pending during the winter months, which typically have less buyer demand than the springtime. Since by February we’re already gearing up for the spring surge of home buyers (or so we hope), it makes sense to move to the higher side when pricing. In June it’s the opposite; we’re looking at “Sold” data for homes that went pending during the busiest time of the year just as we’re approaching a summer market that is typically slower, so it makes sense to price more conservatively.