Navy Expeditionary Combat Command

Pricing Your Home in This Difficult MarketBy CAPT Joe Gladden, USNR (Ret), Realtor®Veteran Realty Serving America’s Military, Inc.VR SAM®You don’t need me to tell you it’s a tough time forsellers throughout most of the country, andmany military families are facing very difficultcircumstances and decisions. But, we can offerinsight to sellers on pricing your home to sell.There are several facets of “marketing” your home,including presentation, timing, and advertising. All are important, butwithout question . . . and please don’t let anyone convince you to thecontrary . . . the most important aspect of marketing, and successfullyselling your home, is pricing it at or near market value.It is important first to get past the understandable emotions of howmuch your home is worth. The home investment isn’t like our TSP ormutual funds. We buy our homes because we like them, decoratethem to suit our tastes, and raise our children in them.The faster sellers get past the emotions and focus on the truemarket value, the sooner they can move on to the next duty station . . .with family in tow. It is very important to get the pricing right thefirst time and thus deserves considerable thought! By so doing, youget the “bounce exposure” when new on the market which increasesthe likelihood of selling. And it beats “eating” the mortgage payment(not to mention the stress) for several months while discoveringmarket value the hard way.Let’s first consider what Market Value is NOT:* The assessed value for tax purposes* How much you paid, improved, or owe for your home* How much cash you need from your home* The sales price of your neighbor’s home or the appraised value ofyour home when you refinanced last year.Market Value is: “the price a home will command from arational purchaser under normal conditions.” Supply and demand,and, thus, market value, will always be a local phenomena. Whiledemand is certainly influenced by national circumstances such asinterest rates, the local economy will generally be the key factor inboth demand and supply of homes.Wait a minute! Why isn’t the current tax assessment an indicator ofmarket value? Just a quick word to address the often confused differencesamong three words;Assessment, Appraisal, Comparative Market AnalysisMany people use these words interchangeably (includingRealtors ® ) and believe them to be clear indications of market “value.”Here are some definitions:“Assessment” – “the tax assessment” is a number used by the localgovernment (county, parish, etc.) to establish the property tax liability.The “assessed value” is multiplied by the “tax levy rate” to determinethe annual property tax bill to the homeowner. Since the tax rate orlevy is usually determined by the voters, the easiest means for thelocal government to adjust the amount of aggregate taxes collected topay for schools, roads, etc., is through the annual “assessment.” Inmost areas this is done by a very impersonal formula. Whileassessments generally follow the market trend, they have little or nocorrelation to the price a house will ultimately fetch on the market!The tax assessor never steps foot in the house; has absolutely noidea of the condition of the home; can only make assessments basedon work performed under permits. The assessor will not knowwhether the kitchen was upgraded with Formica left over from the“I Love Lucy” set or high grade granite, upgraded cabinets, andstainless steel appliances . . . which can easily be a $30,000 difference.Assessments almost never take into consideration surroundingfactors such as the power line that cuts across the property or thespectacular view of the mountains.“Appraised Value” – “an approximate market value” established by anindependent, trained, and certified professional after an on-siteevaluation of the property and condition. The appraiser will comparethe home to recently sold homes with similar characteristics andhomes presently on the market in the same locality.This is the best indication of market value . . . at a specific point intime! But it isn’t perfect. Appraisers can review the listing informationon recently sold comparable homes but, of course, can’t visit them toverify upgrades and conditions. Many savvy sellers invest in acertified appraisal (generally $300-$400) just before they put thehouse on the market to substantiate the list price.Comparative Market Analysis – Through their Multiple ListingService and specialized software, your Realtor ® can compare yourhome to similar model homes in similar local developments thateither sold recently, are active listings, or under contract. They canthen fine tune the analysis with the various options and features inthe homes. When this information is presented in a tabular formatthat summarizes the primary features such as lot size, age, bedrooms,baths, etc., a price range becomes evident. Experienced Realtors ®with good comparables can usually come very close to market value.The more “recent, comparable” homes in the analysis, the better.While the “sold comparables” are more indicative of actual “marketvalue,” the “active listing comparables” paint a better picture of thecompetition in your market. Synthesizing both sold and activelisting information is the key to determining the correct list price.Be certain that smart buyers will consider those active comparables!However, to be effective, Realtors ® MUST be willing to “tell it like it is”even at the risk of delivering news that the client doesn’t want to hear!We hope this helps and always welcome your questions via e-mailor phone call. By the way if you would like a copy of the VR SAM ®Military Seller’s Checklist, please ask. You can contact us at:www.vrsam.come-mail: homesformilitary@vrsam.com703 754-3036 or 877 878-7726Visit the VR SAM ® National and Northern Virginia MilitaryCommunity Forumshttp://vrsam.conforums.com/Find your home, list your home FREE atwww.moresam.net28 NRA NEWS/APRIL 2008