Viewing dollarsIn a previous article we looked at Five Common Methods To Determine Price. In this post I will discuss how to come up with a price that will actually result in a sale. After all it?s your price, your condition, and your location that determines whether your house will sell at all. You have no control over your location since you are already living there. Condition is important and we will talk about it in the future. Any property will sell if it is priced right. The answer to your marketing time is PRICE.

I mentioned to a group of realtors last week that pricing a home is more of an art than a science. Now, after 15 years of marketing real estate in Wasilla and Palmer I make a myriad of adjustments in determining the correct value of a home. If a home could be priced with strict mathematical adjustments it would be easy to digitize. But computerized valuations will never be able to make accurate value assessments in rural areas where we observe such a variety of properties.

Lets look at a few of the adjustments needed to accurately determine value.

  • Price for finished square feet. We need to compare the price of the finished square feet for on-grade, above grade and below grade square footage. If a home is a one story ranch it is best to only compare it to similar sized one story ranches.
  • Price for unfinished square feet. Many homes in the Mat-Su Valley have some unfinshed space?this is Alaska after all! This square footage can be anything from bare stud walls with no insulation to almost finished space missing only flooring or trim. An adjustment needs to be made accordingly.
  • Amount of rooms. The classic 3?2?2 is the easiest home to evaluate. That means three bedrooms, two baths, and a two car garage. You hope to find similar homes to compare. After that you have to add and subtract dollars for more or less bedrooms, bathrooms, and garage spaces. You also make price adjustments based on the location of those rooms. If there is no bathroom on the main floor, for example, it?s worth less money.
  • Location, Location?, This is where the art starts coming in. Generally, a home between Palmer and Wasilla is worth more than one in the Butte or in Big Lake. But, it?s possible that the immediate neighborhood may cancell that differentiation. Or it may only partially cancel the value difference, a judgement needs to be made and a dollar value needs to be put on it.
  • A view: what is it worth? Is it a north view or a south view? Is it a mountain view or a lake view? How much will a buyer give for the view? Will an appraiser agree with the added value? A view is worth something and you need to put a dollar value on it.
  • Land: Is it a flat one acre building lot? Good, because you should be able to find some good comparisons. If it is larger than two acres you have to make some determination of the value a buyer will give for the addtional land. Most buyers are looking primarily at the house and immediate usable yard space. After you get two acres or more the land diminishes in value compared to the value of the house. The type of land, the restrictions on the land, and the shape of the lot all contribute to the price. The additional land and it?s value also diminish the amount of buyers for the house. Most buyers are not willing to pay for additional land.

These are the main determinations for valuating a property. By this time we have come up with a price but realize that we have made quite a few judgement calls. We are trying to read a buyer?s mind before we even meet the buyer.

Now we have to look at the number we have and make some other comparisons which we will talk about in the future.