How We Determine the Value of Your Home

I hear this on just about every single listing appointment I have: 'I think my house is worth X'. My first question following is always 'Why do you think it's worth t...

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How We Determine the Value of Your Home

Posted by Danny Force on Sunday, April 9th, 2017 at 3:23pm.

I hear this on just about every single listing appointment I have: 'I think my house is worth X'. My first question following is always 'Why do you think it's worth that?'. The immediate answer is usually 'I've done my own research, and that's what I think it's worth.' That's when I know how the rest of this appointment is going to play out, and just another reason why Realtors are necessary even in an age of so much information.

Texas is a non-disclosure State. If you don't know what that is, pay attention.

The final amount a home sells for is not disclosed to third party websites in Texas. No matter how much you want to believe the appraisal district, tax rolls, or the dreaded unreliable Zillow, it's something you are unable to find on the internet. Hate to break it to you. The only people who know the final sales price of a home are the realtors involved, the lender, the title company, the buyer and seller, and anyone they choose to tell. It is illegal for us Realtors to advertise the final sales price in Texas to anyone. It cannot be on a mailer, website, or any type of formula where a person can put the math together (i.e. sold for $5K over list price where the address is listed on the advertisement).

Comps are determined by some formulas and adjustments, and are done by both appraisers and Realtors alike. If you have a Realtor who's worth anything at all, like me, we have undergone training by appraisers to be able to more accurately price our listings to avoid appraisal issues once the home is under contract. To be frank, because the formulas are intricate, here's a basic rundown of how a value is determined. The square footage of the home is the starting point, and a comp range is determined by using the last 6 months of home sales within the neighborhood within a certain number of square feet on either side of the target home. Then they take only the homes within 5 years difference of subject property within the comp range. Those are your basic ones. Then adjustments are made for square footage difference, updates, pool, all the way down to location of the lot in the neighborhood. There's another formula if there's not enough neighborhood comps. More information on the appraisal process HERE.

I've lost several listings because either a seller thought the home was worth too much due to 'their own research', or had a listing agent come in and grossly overprice the home, without any actual evidence of it being worth more, just to get a listing. If you're interviewing multiple realtors, you should probably hear very close numbers as to the worth of the home. If you're hearing someone else say a much higher number, or just someone who agrees with an unrelenting seller, you should ask yourself why. If they can't prove it, are they really someone who you want doing your negotiating for you?

You may be asking about now when it is every divulged what houses actually sold for. Valid question. Listing agents can say what comparable homes have sold for during listing appointments, and buyers agents run comps before making offers to make sure the house is actually worth what it's listed for. So there are situations where the public may know what the houses did in fact sell for. You just cannot find them simply with the click of a button on Google.

So when someone tells me they've done their research, they don't know what it is they're actually researching. Just because a house is listed for $300K and is under contract doesn't mean it will sell for $300K. It could be more or even less, which would make a difference in the value of your home. I've seen several homes in my own neighborhood sell for 10% less than list price because the Realtor overpriced it to begin with as a method of getting the listing (don't get me started on the unethical matter of doing so), which would make a huge difference in the pricing of a similar home if a For Sale By Owner thinks it sold for the list price. This is also a reason you should never FSBO. I digress.

Lastly, Zillow doesn't know the value of your home either. They don't have access to what the homes sell for, so they're going the FSBO route and just looking at appraisal tax rolls and listing prices. I actually sold my mother in laws home for over $125K more than its own 'Zestimate'. It was worth every penny of what it was sold for, and it's a good thing she listened to me. It doesn't cost you a dime to have a listing appointment with a Realtor to find out your value. I encourage you to do so.

So, if you're looking to sell a home, request a FREE HOME EVALUATION on my website, or CONTACT ME today.

Check out my YouTube channel for all my Home Selling Tips and the Home Selling Process.

Danny Force
Keller Williams Realtor
850 E. State Highway 114, Ste. 100
Southlake, TX 76092
C: 817-903-5442
danny@dannyforce.com

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