How much is your home worth? Even if you don't plan to sell in the near future, it's an intriguing question. Eventually, almost every house ends up for sale – and determining its value is critical to maximizing profit and selling within an acceptable time frame.
So what’s the best way to find the value of your home?
You've probably come across Web sites where you can look up property values for homes. You may even have looked up your own house. Home value is one of the most common real estate-related Web searches.
Sometimes these sites can be very accurate. The key word in that last sentence, though, is sometimes. Often, the accuracy leaves quite a bit to be desired. Take, for example, one of the most well known real estate sites, Zillow.com. The site offers estimated market values, called Zestimates, for homes across the country.
According to the most recent numbers (last updated Oct. 21, 2009), the median error of Zestimates for homes in Texas is 14 percent. That means that half of the estimates from the site were within 14 percent of selling price and half differed from the selling price by more than 14 percent.
Think about that for a minute. Fourteen percent of $150,000 is $21,000. Nobody wants to price their home $21,000 too low. And what about the other half of homes on the site – the ones with estimated values more than 14 percent away?
Want some more numbers? Zillow charts show that that 62 percent of their estimates for homes in Texas are within 20 percent of the actual transaction price. Again, using $150,000, that means that the actual sales price of almost four out of every 10 homes in Texas is more than 20 percent, or $30,000, inaccurate – either high or low – and that’s a pretty big range.
Additionally, if there isn’t a lot of data from one area or another, the numbers could be even less accurate.
Dig deeper to get the right price
It may sound as though I'm bashing Web sites that provide home estimates, I'm not.
In fact, the sites provide very useful information and interesting features. What I am saying is this: If you over-rely on information from a Web site to set your selling price or determine your offer price, you could be making a big mistake.
Most home-valuation Web sites will tell you that their information is just a starting point and no substitute for specific market knowledge in the area ... and they’re right. Web sites cannot take into account the condition of the home, recent upgrades, and positive or negative changes in the area that can drive prices up or down.
Get more input
So where else do you look? For starters, you can view comparable properties for sale in newspapers and online. Visit open houses. Talk with friends and acquaintances who have bought or sold recently.
Mostly, though, I urge you to contact a Texas Realtor. Texas Realtors study the real estate market in depth and can discuss specifics such as setting a reasonable price, marketing the property and coordinating the sale of one home with the purchase of another.
Why getting it right the first time is so important
You may wonder what the big deal is about setting an asking price. After all, can't you just aim high and see what offers come in – or if no offers come in, lower your price? Of course you can. But that may not work out the way you hoped. When a seller overprices a property and it sits unsold for much longer than other similar properties, that home can develop something of a reputation – buyers wonder what's wrong with it. Often when this happens, the seller ends up selling for a lower price than had the home been priced accurately to begin with.
So do some homework, get as much information as you can and sit down with a Texas Realtor to help you arrive at an appropriate asking price. You'll have the confidence that you are maximizing your best interests in your next real estate transaction.
For more on selling your home, I invite you to visit TexasRealEstate.com. For your real estate needs, please contact RE/MAX Genesis at 830-833-2000.