Real Estate Pricing – Know the Difference
We will assist you in determining a value range before you make an offer. We start the process for your Price Driven Approach we start with the Multiple Listing Service (MLS). This is a vague report based on other homes in the area, your neighborhood based on square footage, finished basement, and garage size. This report will include Sold, Expired, Pending, and Active. We also request a report from RPR (Realtor Property Resource) which includes homes sold in the MLS and homes sold privately. This report relies on the data from your neighborhood and surrounding area. It will use algorithm analytics to determine the Price Range.
Lastly, we look at the Value-Driven Approach
Next, we need to filter what an appraiser’s opinion could be about value. Part of their mathematical modeling is a condition rating system. Depending on the condition and improvements will move the value up or down. The appraiser will review updates, features, and quality of materials used to determine Fair Market Value. Make sure you select a Realtor that knows how to use this approach.
Terms to understand for Price Driven Approach
Public Record Data: AVM- Automated valuation model (AVM). A service that can provide real estate property valuations using mathematical modeling combined with a database. Most AVMs calculate a property’s value at a specific point in time by analyzing the values of comparable properties. (Example: October of 2016 to October 2017 for 2018 Values). Your City, or township uses this algorithm calculations modeling in their public data only to determine value ranges and averages.
Realtors Property Resource RVM uses public data and the multiple listing service data in their algorithm calculations. It will also give an AVM and RVM confidence score in the report.
Price Driven Approach
I was watching a documentary on Warren Buffett and his approach to business. Seeing he is in the Real Estate Brokerage business I was curious and watched. Throughout the documentary, he had the same message…” Price is what you pay, Value is what you get”
When you compare prices from sold properties and using data just from the Multiple Listing Service, I call this Price Driven Approach. This gives me a benchmark range to start my evaluations. One of the mistakes I find that Realtor over or under price properties because they only evaluate Price.
Value-Driven Approach
No two homes are EXACTLY the same. There are two parts to Value.
Part one – Determining Value
Looking at the property through the eyes of an appraiser. What information will they need to decide the condition rating of the property? What does this home have the other homes don’t that can add value? Is the basement finished, basement full bath vs half bath or no bath at all? What updates are done and when? What needs to be replaced, for example windows. We will go over each home and add + or – in each category.
Part Two – What value do you see.
Does the home have everything you are looking for and is it move-in condition? Do you want something that needs work for some sweat equity? Some of the improvements made to the home make it easier to sell but doesn’t add value to the property. Sellers usually start their price more on the emotional side and overtime logic steps in. Usually, when buyers start their looking phase, they are logical due to pricing. You move toward emotion after they find the ONE.
My job
To filter out the emotion and look at the big picture logically. When you put in the offer you either feel comfortable with the price they are asking, or you don’t. If you don’t agree, I need to share with the agent how we determine your number in your offer. It’s important to supply them with all data. I set the pace for exactly what an appraiser is going to do.
What does an Appraiser Do?
An appraiser like us will start with sold price + or – condition and improvement + or – differences from the sold properties = value. The condition code will actually change the formula used to decide the value. There is a 2nd underwriting system that verifies all condition codes the appraiser uses for each property sold. Part of the condition rating equation will be improvements. Some improvements that increase value; Roof, Windows, Kitchen, Bath(s), mechanical, and maintenance. Also, does a home have a finished basement? Is there a full or half bath in the lower level? Is the lot large or small? Do you have a walkout or a daylight basement? They will filter in garages, a 2 car vs. a 3 car, and lastly, review square footage. What about the quality of the material….builder grade or high end.
Save Thousand with Zero ➕
Our goal is to save you thousands on your real estate transaction. It’s your money, so we need to put it to work for you. We have our favorite and best loan officer to assist you and answer all your questions. Unlike some other lenders, Keller Mortgage isn’t spending Millions on marketing and advertising. Therefore, we pass those savings on to you by offering no fee’s and low rate. Watch the Video ☝☝☝ and learn how to…. SAVE THOUSANDS!
Market Stats and Updates
Know the Market You’re In!
If you haven’t reviewed your 3-year market trends based on the average price in your City and your price range…I recommend you review it now. The report will also provide an idea of how long it could take you to sell the property (Market Supply). This is how long it would take to Sell ALL the home in the Multiple Listing Service if no other homes came on the market.
Monthly Market Report Recession to Recovery
It’s important to protect your real estate investments, and to do so you need the facts. This month has been the craziest month ever and I’ve never worked so hard trying to keep up with all the data flooding in from Wall Street, Financial Institution, and Real Estate data sources. Holy Cow! I’m following this very closely and will have updates in most cases daily.
This report is a comprehensive walk-through of the most up-to-date information regarding the real estate industry. So what we knew January-March, well throw it out the window. At the beginning of March, we were talking about having a sensational year. It wound up that in January and February, we sold more houses in more than a decade. So, we were in for a real prime, phenomenal year, and then, BAM! 💥Everything gets put on hold. So, let’s go over the questions that you’re going to be asked, and let’s go over the answers so that you have them. Get Your Report in a Safe Downloadable PDF 👇👇👇
Bottom Line
I recommend as part of your interview process ask questions. Find out what tools they use before you make a commitment to see houses or sign a contract with an agent. No two homes are alike and why should your approach. My goal for each of my clients is success based on facts upfront. They’ve done their homework and now it’s time to find their dream home. We will work through the process until you find the ONE that feels like home.
First and Foremost, Safety First!
As we move forward trying to navigate our way through our new surroundings. Putting your dream of a new home on HOLD shouldn’t be one of them. Now more than ever knowledge will be your power. Know the Market You’re In and your Negotiation Power. Check out Categories for additional updates regarding the Market | Buying & Selling.
In Closing
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