When you're selling a house, you need to be sure you're pricing it correctly. You don't want to price it too high and scare off potential buyers, but you also don't want to price it too low and lose money. That's where a real estate market analysis comes in.
When you do a real estate market analysis (similar to a professional comparative market analysis or CMA), you look at listing prices and selling prices of properties similar to your own. It can be a very helpful tool to figure out your home's market value.
To save time, you can have a real estate agent use their skill and knowledge to come up with a list price. Professional agents do CMAs every day and can give you the most accurate idea of what your house is worth.
If you insist on determining your home's current market value by yourself, you can conduct a real estate market analysis by following these five steps.
1. Analyze Your Property.
The first thing you need to do is take a good, hard look at your property.
How many bedrooms does your house have? How many bathrooms? How many stories is it? How old is the construction? How many square feet is it?
Consider the rest of your property. How big is your yard? What is your lot size? Does it have any special features, like a swimming pool, deck, or garden? What's the garage and driveway situation?
Then look around your neighborhood. What's the school district like? Is there a low crime rate? Are you on a good street? Are you close to local amenities, parks, or public transportation?
Think about your home's original listing price and how long ago that was. Make a list of upgrades or renovations you've made since then and what they cost.
2. Check Your Estimated Property Value.
These websites will have you enter information about your property and they'll give you an estimate of what your home is worth. These estimates aren't perfect, but they give you a good jumping-off point.
3. Find Properties Similar to Yours.
Now, you need to find comparable houses. Look for homes in your neighborhood with the same number of bedrooms and bathrooms, within 350 square feet in size, have similar features, and are roughly the same age.
There are four categories of properties you'll want to look for: recently sold, current listings, pending listings, and expired listings. For all of these categories, the more a home has in common with yours, the better.
Look online for homes in your neighborhood that recently sold. The closer to you, the better. Bonus points if it's on the same block as you. Start with three months, then go to six, and keep searching back as necessary. Find three to six comparable homes and start making a list.
Next, look for current listings. Remember that listing price isn't the same as market value — some homes sell under list while others go above list after a bidding war. These listings will let you see what the competition is up to.
Also, look at pending listings. With a pending listing, the seller has accepted an offer but the deal hasn't yet fully closed, because the final sales price has to be approved by the mortgage lender.
Finally, consider expired listings. Expired listings show you homes listed that didn't sell, and give you a good idea of how high a listing price is too high.
4. Set a Price Range.
Use your list of comparable properties to make a chart. In the chart, compare all of the available data from the homes you found to your own house. Look at bedrooms, bathrooms, square footage, lot size, extras, amenities, and location.
Once you have a good handle on this information, start thinking about price ranges for your own property. Find a house that you know is worth more than yours and use it to set the very top of your price range.
Next find a property that is definitely worth less than yours. This is the very bottom of your price range.
5. Determine Your Home's Market Value.
Now, it's time to use all of your research, your chart, and your price range and determine your home's market value. Walk through your home with a friend and try to view it as a potential buyer would.
Finally, divide the selling price of the comparable houses you find by its square footage. This will give you the price per square foot for each property. Then multiply the price per square foot by your home's square footage. Compare each of the homes on your list to your own. This should give you a good idea of your home's market value.
Want Help Conducting Your Real Estate Market Analysis?
That's what real estate agents are for. Real estate agents know their markets intimately and can be invaluable when determining your house's market value.
Clever partners with agents who are top-rated and who understand their local markets. They can help you find that sweet spot for your listing price. Partner Agents will conduct a free comparative market analysis for you and walk you through the process.