Why is it that some homes sell like hot cakes and others linger on the market? The sold price of your home is determined by what ready, willing and able buyers are willing to pay for your home compared to other homes on the market.
Market Price is a Buyer Magnet
This pricing pyramid demonstrates the percentage of serious buyers who will look at your home based on the List Price compared to Fair Market Value.
Factors included in this category are neighborhood, school district, safety and security (crime statistics), commute distance or access to public transportation, distance to restaurants and shopping, distance to recreation areas, parks and playgrounds.
Your specific lot could also impact the market value regardless of the neighborhood. If your home backs to a busy street or lacks landscaping that is reasonably equivalent to the surrounding homes, it will typically garner a lower price.
This includes the overall size of your home, the layout, the number of bedrooms, bathrooms, living areas, size of the garage and useable size of the lot. Additionally, the value of a smaller home is increased by the influence of larger surrounding homes (Progression). The reverse is also true, the value of a larger home is reduced by the influence of smaller surrounding homes (Regression).
A spotlessly clean, well-maintained home with obvious pride of ownership has a distinct market advantage. Buyers believe, often accurately, that the entire home has been maintained to a higher standard so they are more comfortable making a strong offer. We invite you to read 8 Things To Sell Your Home Fast.
When the location, size and overall condition are within the buyers’ price range, they will use the amenities and upgrades as the ultimate comparison shopping factor. Amenities include kitchen and bathroom upgrades, quality and age of the appliances, hardwood floors rather than carpet, etc.
The price homes have sold for in the past – even the recent past – have less impact on fair market value than the quantity and prices of equivalent homes currently on the market.
What Has Little or No Impact on the SOLD Price of Your Home
- The amount of cash proceeds you need or want from your sale. The sold price is based on what a willing and able buyer will pay compared to other homes on the market. Even if a buyer wanted to give you “a little bit more”, mortgage companies will not lend above fair market value. If your fair market value doesn’t provide the cash proceeds you want at closing, you may choose not to list your home for sale. If you need to sell but the proceeds won’t be sufficient to pay off your mortgage(s), please take a moment to read about selling your home as a short-sale.
- The amount you paid for upgrades and improvements. While upgrades and improvements do have an impact on the fair market value, it is typically unrealistic to expect a dollar-for-dollar return on your investment.
- The tax assessed value of your home. The tax assessed value is the basis on which the city and county collect tax dollars, nothing more. If your tax assessed value is greater than your fair market value, you should take a moment to read about Proposition 8.
- Online value estimates. The online value estimates are statistical averages with no ability to compare the location, size, condition, amenities and current competition of homes for sale.