How much is my home worth?

In today's fluctuating real estate market, answering that question can be complex. Generally, there are four criteria that can help homeowners determine an accurate as well as maximum selling price for their home.

First, investigate area trends. Check with a Realtor to determine the current selling price of homes in your area. It’s also important to understand the market ratios which will tell you if it’s a Buyer’s Market, a Seller’s Market or a Balanced Market. Also compare your home to similar homes that have sold. This should provide you with an idea of what homes are being sold for as compared to what they are listed for.

Next, pay attention to "migration" trends and see if people (and businesses) are moving in or out of the area. One of the best ways to track movement is to read the business section of the local newspaper or talk to the Chamber of Commerce. If there is a lot of movement into the community, chances are home prices will be going up at a relatively rapid rate. Obviously, if there is heavy migration out, prices will be even or could even drop.

Remember, too, that two side-by-side homes can command radically different prices. Part of the reason can be attributed to certain features that may enhance the value of a home in the buyer's eyes. For instance, older homes that have been upgraded with new fixtures, windows or room additions command higher prices than homes that remain unchanged. In many cases, with minimal expenditure, these price-enhancing features can be added and sellers can often increase their property's value by thousands of dollars. Unchangeable elements such as lot size, or single story versus two-story can, of course, impact the value of adjoining homes.

One of the most critical elements in selling a home is pricing. Pricing is an art, not a science. By carefully following the local real estate market or contacting a real estate professional, not only can sellers determine the right time to sell but, most importantly, they can also determine the correct price to list the property at to get it sold.

Why do some homes sell quicker than others?

They are priced right.

Pricing is usually the number one determinant as to how short or how long a home will be on the market. Obviously, the property has to be priced competitively but do not set the price based upon what you heard a neighbor received for their home. Adjacent homes can be radically different. They both may have the same floor plans but improvements, views, a more desirable location in the tract and other seemingly small variations can make a significant difference when it comes to price.

In determining the right price, one of the most important traits you need is objectivity. Homeowners, naturally, have an emotional attachment to their home, and because of their feelings, they oftentimes overestimate what their home is worth. Despite the attachment, try to be practical and logical. Make a competitive study of recent sales that are comparable to your home. Evaluate price per square foot, age, condition, location, schools and extras.

Remember that the value of your home can be impacted by developments that are not yet in place. Is there vacant land nearby? If so, what businesses or structures will be built there in the future? Is it a desirable addition to the neighborhood? If there is vacant land, visit the local planning and zoning departments in your city to see what might be developed there.

Remember too, that little things can make a big difference once the home has been priced. Cosmetics are crucial. Spruce up the property as much as possible.

A little exterior paint, some new shrubbery and making sure that the house is always neat, clean and smells good can make a tremendous difference. The first thing buyers see is the exterior and it needs to look really good. You never get a second chance to make a first impression.

In today's market, there are buyers for homes that are priced competitively.

A lack of "action" usually indicates that your property is one of those that have been priced incorrectly. Most importantly, be objective. Try to look at your property as if you were a buyer going through it. What do you like? Dislike? How does it compare to other properties in the area? Is it worth more? Or worth less?

Answer those questions objectively and you will not only be on the way to pricing your home correctly . . . but to selling it too.

Thinking about selling your home?

If so, there are two ways to go about doing it -- sell it yourself or engage the professional services of a REALTOR.

Obviously, the advantage of selling the home yourself is you do not pay a commission. But statistics show that when you team up with a real estate professional, the chances of selling your home in a shorter time span (and usually for more money) are much better.

There are pros and cons to each technique. To determine which road you are going to take, start by asking yourself one question - If you needed a medical operation would you perform it yourself or have a professional do it for you? Don’t gamble with what is probably your biggest financial asset.

Selling a house in today's market is not like it was a decade ago. The market and consumers are much more astute and the laws are more complex. Liability and elaborate disclosure requirements can complicate the sale.

Perhaps the biggest obstacle a seller faces when they decide to market their own property is emotional attachment. Many owners are blind to flaws that a real estate professional can see and be objective about. And, a good Realtor goes further and recommends steps the homeowner can take to make the property more appealing - a fresh coast of paint in the kitchen, replacing a rusty mailbox or removing clutter to make the home appear more open. This objective view can be the difference in making a sale.

A good Realtor will be there to represent you and negotiate on your behalf. Impartiality and excellent negotiation skills can really work on your behalf in ways that may surprise you in a transaction.

An experienced Realtor can also provide a seller with a Comparative Market Analysis, so the owner knows what the home is actually worth, instead of what they feel it's worth.

Which home improvements add value?

While some home improvements can add significant dollars to the resale value of a residence, others are barely worth the investment. So how can homeowners decide which improvements will add significant value and which won't?

Here are a few tips on cost-effective improvement; upgrades that can make the difference in the sale price and add value to your property.

As a rule, kitchens and baths are the two areas that most often make the difference in a sale. They make the most impact on buyers and definitely impact what buyers perceive the property is worth. But kitchens and baths don’t have to be expensive to upgrade and give you a good return for dollars spent.

The national average for remodeling an entire kitchen is more than $25,000 with some running upwards of $100,000 or more, depending on what you do. A complete remodel can include cabinets, change of layout, floors, counters, sinks, appliances, lighting and new windows. But there's a way to put a new look on this important area without spending significant amounts of money. For a relatively low cost, homeowners can make spot improvements. For example, the existing countertop can be replaced with granite tiles or slab. The existing cabinet faces can be replaced with solid wood faces that are cosmetically more up to date. Upgrading the flooring and buying new appliances can make a big difference. The end result is improved appearance and usually a higher selling price for a relatively minimal expenditure.

Here are some other areas that influence price: Central air conditioning, even in our climate, is an important feature for which buyers will usually pay extra. Room additions, on the other hand, may add value, but may not end up paying for themselves. Upgraded carpeting, top-of-the-line windows and vaulted ceilings can command higher resale prices but it is unlikely that the seller will be able to recoup their original investment.

Existing features that have diminished with age can usually be repaired without a lot of added expense. Hardwood floors are relatively inexpensive to refinish but it is a good investment because buyers are willing to pay more for the brand new appearance, beauty and functionality.

For older homes, people are more energy conscious, so improvements in the insulation of windows, doors and storm doors are smart investments. In general, neutral, light and bright are the best rules to follow - a neutral decor, freshly painted walls and clean, unworn carpeting also help to sell a home faster. If a buyer can walk into your home and feel that they won’t have to make a lot of changes, they won’t be thinking about how much they need to spend on the house which always translates into a lower offer. Let’s nip those thoughts in the bud.

Over-pricing your property?

A high price conveys the message that the seller may not really be interested in selling. When a home is priced too high, agents and buyers usually just cross it off their list and move on. After all, there are plenty of other listings. Deciding the value of a home is an art and not an exact science so it's understandable that a seller might put their home on the market with an asking price that is on the high side.

Most of us believe that our homes are really "worth more" than one down the block, around the corner or the place next door that just sold. And, if we are wrong, we can always drop the price later, can't we? Yes, but by then, the seller may have not only have lost potential buyers, but they may have also driven off interested Realtors and Realtors are the number one source of buyers.

When a property is put on the market, the first 30 days are the most critical. Statistics show that's when most buyers (and Realtors) see the property and interest is highest at this time. The more unrealistic the price on the property is, the fewer the prospects (and Realtors) will view it. Thus, the initial period is critical with proper pricing.

Some sellers, however, believe that if someone is really interested they will write a low offer and the sellers can counter. Some will and some won't. Some well-qualified buyers may just walk away. Sometimes the buyers who see your overpriced property are expecting much more for that price and the real buyer never even sees it because he is looking at homes in a completely different price range. The bottom line is a high priced listing will turn many buyers off. Still, a seller wants to be confident he or she is getting the best price for their home.

The way to accomplish this is by talking to a Realtor before listing the property. Ask for a comparative market analysis which is a study of what similar homes in the area have sold for recently. Compare your property to those and ask the agent to help you calculate a fair market value. Also, ask your agent to show you the ratios. It’s important to know if you are in a Buyer’s Market, a Seller’s Market or a Balanced Market. Not all agents understand ratios so be sure that you talk with someone who does.

Be objective even though it is your home.

Remember, an over-priced listing will usually result in an unsold property.

How to make your house look bigger and better.

One sure way for your house to appear larger and more appealing is if the clutter is eliminated and furniture and household goods are reorganized. The time to have a garage sale is before you put your house on the market, not after it’s sold! When you decide to sell, start going through your closets and cupboards, eliminating items you don't want to keep. Do the same in the garage and backyard. Purging your home of unwanted items is a healthy thing to do and will increase your chances of selling for top dollar.

Get rid of or store the odds and ends. Call a storage company that will bring a portable box to your driveway and load it up and later bring it to your new home. It's interesting to note that the longer someone lives in a home, the more used to the clutter they become.

Unfortunately, closets, cupboards and garages brimming with "old treasures" make a home look small and cramped to a prospective buyer. Sellers should also carefully examine their furniture and consign items that are not needed to storage or the garage sale. Most homes occupied by the same owner for several years tend to be somewhat over-furnished. Erring on the side of space, not clutter makes for a more marketable home.

Another "item" that adds to the clutter of a home are excess knick knacks. Scrutinize the kitchen for rarely used utensils/gadgets; miscellaneous items in closets and cupboards, even small furniture and throw rugs that can be neatly stored. Just keep the things on the counters that you use daily and even then be careful. You won’t believe the difference that will make in the appearance of your kitchen! Clear off all that stuff off your refrigerator door and organize your cupboards.

Pack or give away clothing that will not be worn as well. Rearrange and organize. Remove as many articles as possible from the kitchen and bathroom countertops to the cupboards below. They'll still be within handy reach in the newly created space. Organize your closets. Clear off your night stands and bureaus.

Size up the arrangement of your furniture. Is there any room for improvement there? Examine the walls and windows. Do they need repainting or new window coverings? How do the carpets look?

For some expert, objective advice, have your real estate professional go through the home. Realtors know what enhances a property's appearance -- and what hinders it.

One last hint is don't forget about the outside. Sweep the garage and sidewalks, trim the lawn and shrubs, wash all the windows, inside and out. It all helps to make your home look fresher, lighter and larger. Take a really good look at your entry and front door. Does it say “Welcome to my beautifully cared for home”… or something else we don’t want a buyer to think? Remember what I said before. You only get one chance to make a first impression.

How can two similar homes vary in price by more than $20,000?

Forgetting for a moment, the interior improvements that set one home apart from another, there are exterior factors that also influence price. For instance, homes on the main streets that lead in and out of a tract generally appreciate more slowly than those within the tract that are not on primary streets.

Primary ingress/egress streets generate more traffic and are therefore, generally less desirable. Thus, they command a lower price. Within a tract, a home on a cul-de-sac may generate a higher price for the same reason, less traffic. Cul-de-sacs are frequently like a maze and they discourage drive through traffic which is means more residential privacy.

Even properties on one side of a street can be worth more than a similar property across from it. Why? Certain communities, because of their name, are more prestigious than others. Beverly Hills, California an example. It is known worldwide for its high-end shopping, expensive homes and impeccable name. In sections where Beverly Hills is divided from other cities and/or communities by a street, the homes on the Beverly Hills side of the avenue command a higher price than those in the non-Beverly Hills city across from it. In the Seattle area, school districts can have a similar effect.

Existing homes may differ radically in price for another reason. One homeowner wants to sell and the other has to sell. The motivation for each is quite different, and so may be the pricing strategies. The increasing foreclosures we are seeing have a downward effect on pricing as sellers want to sell for any price.

Some other factors that influence price: What commercial developments are adjacent to the tract? How undesirable are they? And, don't forget supply and demand.

The wise buyer checks one other thing, a community's master plan. This is a must, especially if a tract or home is surrounded by vacant land. Most communities have one. It is usually drawn up by planners within the city or county and approved by a local planning commission. Find out what is going to be built nearby and determine how it might impact the value of the tract. All this, of course, takes time and homework. But, it is well worth it, especially when you consider that the purchase of a home is usually going to be the largest, single financial investment most people make in a lifetime.

Should you appraise your home before putting it on the market?

It isn't necessary, but an appraisal will give a good indication of the price the seller will actually get for their property. A real estate agent can give you similar reliable data to determine current market value.

First, to determine the asking price, a seller's agent will look at the "comps," the price for which "comparable" homes in the area have recently been sold.

Based upon these prices, the seller should determine what they ask. For example, if similar properties in the area are selling for $700,000, then trying to get $750,000 usually does not make sense. Thus, before putting the house on the market, a seller should review the "comps," which can be obtained from a local real estate professional.

The appraisal process used by a licensed appraiser is more theoretical than a "comp," and doesn't predict what a buyer will be willing to pay. Why would anyone ever get an appraisal then? Although rarely needed by buyers or sellers, appraisals are usually required by lenders who are considering making a loan.

Sellers of expensive custom homes may get appraisals because there may not be any homes in the area that compare to theirs. Buyers of these one-of-a-kind homes will also have more confidence in an asking price that is supported by an appraisal. Before determining an asking price, sellers should give their agent a list of major improvements done to the home, such as a new roof or upgraded heating system. This will help the agent consider all the factors when recommending a price. It will also put him or her in a better position to sell the house and all of its features for the best possible price.

Zillow.com has been making a big splash in the news lately and many people who visit their site to get a “Zestimate” have been surprised how unreliable the Zillow pricing is. It’s based upon data from the Assessor’s office and doesn’t take into consideration improvements homeowners have made to a property, what the views are like and what condition the home is in. Oftentimes the tax records are not correct so that throws things off. A recent article in the Seattle Times real estate section stated that the “Zestimates” in the Seattle area can be off by as much as 12% above or below the correct sales price. A 24% error in pricing is just not something you should depend on but the site is fun and interesting to visit. In time perhaps their data will be more dependable.

What is the MLS?

MLS stands for "Multiple Listing Service," which is a computerized listing service of virtually all the homes that are for sale in a specific area. In Seattle we have the Northwest Multiple Listing Service which is the largest MLS in the country. When a Realtor lists your property for sale, your home is placed into the MLS system. The big advantage to sellers is that the MLS is the #1 resource used by buyers and agents to locate homes.

Individual real estate companies also have their own websites that are user friendly and full of information. Their data comes from the MLS but it interpreted, accessed and presented in different ways. Windermere’s website consistently gets more hits than any of the other sites and has very easy tools to help buyers find properties for sale with the interface of an easy to read map. It’s also updated every 15 minutes so the data is accurate and reflects the market. You can get direct access to the Windermere interface right from my website. Just click on Home Search and you’re on your way home.

Properties that are not listed (usually those being sold by their owners) are not on the MLS thus there are many buyers and Realtors who will not be exposed to the home. The MLS has become such a standard in real estate that no serious broker would think of trying to sell real estate without it. It would be like an accountant trying to work without a calculator, a computer and spreadsheets.

Buyers can narrow their house-hunting searches dramatically by using the MLS. For instance, their real estate professional can do a computer search and ask for a listing of all homes within a certain location and price range that have three or four bedrooms and that are not more than ten years old. Not only will this request generate a brief list of viable possibilities, it also helps buyers gauge, roughly, what they can expect to get for their money and to compare the value of the homes listed. The agent can then email this list complete with all the photos, map and listing information to the buyer.

The MLS is more than a system that lists properties. It's an aid to both buyers and sellers and is a definite asset to consumers when it comes to real estate.

What is escrow?

Escrow is a process that begins when the Purchase and Sale paperwork is signed by both parties and ends when the loan is approved and all the necessary requirements have been fulfilled by both buyer and the seller.

The escrow company is an impartial intermediary and an agent of both the buyer and seller. The escrow holder, which may be the company of the selling agent or could be the escrow office, is given the buyer's earnest money deposit and holds onto all funds until the terms of the agreement are finalized. They notify the seller when the deposit has been received and later when the check has cleared. The escrow holder also draws up a set of instructions, itemizing things that have to be done to the property before it is sold and the title is transferred. For example, if the seller is required to supply a pest or radon inspection, the escrow holder would track this obligation and make sure it is fulfilled before any funds are transferred to the seller. Findings in the pest inspection report must be corrected on or before the close of escrow. The title company provides a complete ownership history of the property and any liens on record in the preliminary title report. Anything that is out of the ordinary, such as condo liens, judgments, etc. against the buyer and the seller must be cleared prior to the close of escrow. The escrow process can be any number of days depending on what is agreed upon between the buyer and seller. To assure a timely closing, the buyer should do things like inform, the lender of the name and phone number of their insurance agent as soon as possible. The homeowner insurance policy needs to be ordered early, so verification can be made. The lender will not fund a new loan without a homeowner policy and if there is a delay, the escrow process may be held up.

Closing costs:

The responsibility of who pays for closing costs is always negotiable but local custom dictates which fees the buyer will pay and those the seller pays.

Typically, the buyer pays for home inspection services, deed preparation and recording fees, depending upon what is customary for the county the property is located in. He or she may also pay for title insurance for the lender. The buyer is also responsible for any fees or costs associated with obtaining the purchase loan. The buyer and seller usually share in the cost of escrow services.

The seller customarily pays the real estate agent's commission, as well as costs associated with transferring an unencumbered title, such as a title insurance, reconveyance deed and the excise tax which is paid to the State of Washington. They also pay half of the escrow fee. Sometimes a seller will sweeten the deal by offering a one-year home warranty to the buyer. Who will pay for what closing costs customarily differs from county to county and should always be clearly spelled out in the purchase and sale agreement. A creative sales associate will consider the cash, income and tax situation of the home seller and the buyer when constructing an offer. For instance, if the buyer is short of cash, the agent may ask the seller to pay the buyer's loan fees up front in exchange for some other concessions from the buyer. In this scenario, the buyer and seller benefit and both get what they want.