How Much is My Farmington Hill MI Home Worth? 6 Factors That Influence Home Value

How Much is My Farmington Hill MI Home Worth? 6 Factors That Influence Home Value

How Much is My Farmington Hill MI Home Worth? 6 Factors That Influence Home Value: Determining the appropriate asking price for your Farmington Hills MI home is vital for a successful sale. Even if you have experience in the Farmington Hills / Oakland County MI real estate market, home prices can differ substantially from initial evaluations. Effective home valuations make the home selling process faster and less stressful, and knowing the right value of your home can help you secure a better deal. 

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It’s easier to avoid common home selling mistakes when you are aware of the factors that influence your home’s value, and pricing your Farmington Hills MI property correctly from the beginning is key. If you overprice your home, you could lose potential buyers that are actually in your price range. Your home will not be attractive to buyers in the higher price range compared to other similarly priced homes they are viewing.

The last thing you want is to have your property linger on the market and can create the vibe among buyers that there’s something wrong with it, otherwise known as a “stale listing.” Pricing your home too low may cause it to sell fast, but for less money than you would have received if priced at market value.  

Six key factors to consider when pricing or valuing Farmington Hills home for sale include comparable homes (comps), quality of the neighborhood, the market, nearby features, size and appeal, and age and condition of the home: 

1). Comparable Homes or “Comps”

One of the best indicators of your home’s value is the sale prices of similar homes in your neighborhood that have sold recently. These comparable homes are often referred to as “comps.” Most real estate experts will rely on comps to estimate a home’s value and will consider recency, similarity, distance, and location: 

  • Recency – homes that were sold recently or within the last 90 days
  • Similarity – homes that are most similar to your property in terms of features such as year built, two-story vs. ranch, number of bedrooms, bathrooms, basement, square footage   
  • Distance – homes in the same subdivision or sold within a one-mile radius of your property
  • Location – homes with the same placement such as on a busy street, cul-de-sac, golf course, or waterfront.

Agents will look into the difference between each comp’s listing price, and the price it sold for. Your agent will also rely on inside knowledge of housing inventory and the local market. That nuanced understanding is invaluable, particularly when measuring the unique aspects of your home with raw data about comps. They find these homes using the multiple listing service (MLS), a regional database of homes that agents pay dues to access. 

2). The Neighborhood

The neighborhood where the house is located will have an impact on a home’s value, responsible for both qualitative and quantifiable aspects of a home’s appeal. For example, school quality significantly affects home values and families often choose the location of their next home by where their children will go to school.

According to the National Bureau of Economic Research, there is a definite correlation between school expenditures and home values in any given neighborhood. A report titled, “Using Market Valuation to Assess Public School Spending,” found that for every dollar spent on public schools in a community, home values increased $20.  

On the other hand, if your property is the only house on the block that’s in great condition, or there are neighbors that have unkempt lawns, or other visual disturbances, then the value of your home could decrease. According to the Appraisal Institute, a bad neighbor could potentially reduce your home’s value by up to 10%. This sort of effect is referred to as external obsolescence, where external factors have an effect on your home’s value, instead of factors on your property that can cause a decrease.

3). The Local Market

The current state of the housing market will have an impact on your home’s value. Home prices are shaped by supply and demand and may fluctuate based on subtle changes in your area’s economy. Even if your home is in excellent condition and in a stellar location, the number of other properties for sale in your area and the number of buyers in the market can impact your home’s value.

If you’re buying in a buyer’s market, you’ll likely have more room to negotiate on the home’s price. If you’re selling in a buyer’s market, you may have to adjust the price to attract more offers or be willing to make concessions to a seller, like paying closing costs, covering repairs, or being more flexible with the timeline.

4). Home Size and Appeal

When estimating a home’s market value, size is an important element to consider, since a bigger home can positively impact its valuation. The value of a home is roughly estimated by price per square foot  (the sales price divided by the square footage of the home). For example, a 2,000 square foot house that sold for $200,000, the price per square foot would be $100. However, the price buyers will pay per square foot can vary greatly depending on the location of the home.

Usable space also matters when determining a home’s value. Garages, attics, and unfinished basements are generally not counted in usable square footage. Bedrooms and bathrooms are most highly valued, and the more beds and baths your home has, the more it will typically increase in value.

5). Home Age and Condition

In addition to size and appeal, you’ll need to think about the home’s age and condition. Typically, homes that are newer will sell for more than older homes because they will typically require less maintenance. Critical components like electrical, plumbing, appliances, and roofing are less likely to need repairs or replacement and can translate to savings for a buyer.

However, an older home that’s been well-maintained may sell for just as much as a newer home. Condition matters. A home’s foundation, structural integrity, electrical work, plumbing, and fixtures are all items worth considering.  

6).  Location in Relation to Nearby Features

Location can be more important than even the size and condition of the house when determining how much value to assign based on the location of the property. According to Inman, there are three primary indicators when assigning value: the quality of local schools, proximity to employment opportunities, and proximity to shopping, entertainment, and recreational centers.

These factors can influence why some neighborhoods command steep prices and why others that are only a few miles away don’t. In addition, a location’s proximity to highways, utility lines, and public transit can also impact a property’s overall value. 

Keep the above factors in mind when pricing your home to help attract serious buyers and to prevent long days on market, which ultimately come at a cost. Even after the listing date, price should be an ongoing discussion between you and your agent. Markets are fluid, so you may have to make some tweaks when all is said and done.

Ready to Sell Your Farmington Hills MI Home? Partner with Top-rated Farmington Hills MI REALTOR – Tom Gilliam

Top-rated Farmington Hills REALTOR® – Tom Gilliam has over two decades of experience helping home buyers and sellers realize their dreams in Farmington Hills MI and the surrounding Oakland County area. Tom offers in-depth local market knowledge and employs the latest technology and the most cutting-edge approaches to marketing your home to get it in front of as many qualified buyers as possible.

You can be assured that Tom is 100% committed to getting your home sold as quickly as possible and for the highest market price. For more information about buying or selling Farmington Hills MI real estateplease contact Tom directly at (248) 790-5594 or get in touch with him here!  

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

 

Why Home Prices are Still Rising Despite the Global Pandemic | Realtor Tom Gilliam

Why Home Prices are Still Rising Despite the Global Pandemic | Realtor Tom Gilliam

To say the economic news coming out lately has been disconcerting would be an understatement. Statistics concerning job losses, furloughs, and unemployment figures have pointed to upheaval in the global economy as a result of social distancing measures, which were put in place by governments to contain the global COVID-19 pandemic.

But according to recent data from Realtor.com, there is one statistic that should give homeowners (especially potential sellers) some comfort—home prices still appear to be on the rise. In the week ending April 25, the median home list price ticked up by 1.6% annually, compared to one year ago. The data comes from the 99 largest metropolitan areas.

To be sure, price growth was higher a few months ago, when prices were rising by over 4% prior to the lockdown. But this is still a positive sign given the turmoil in other segments of the economy, and could provide reassurance about the stability of the housing market for those considering buying or selling their property.

So why do housing prices appear to be holding steady despite uncertainty in the broader economy?

First, it could be that prices are “sticky”, according to Realtor.com Chief Economist, Danielle Hale:

“The slight increase this week is because prices are sticky. Home sellers are strongly resistant to lowering prices, and they’d gotten really close to declining, so we see a bounce-back. I don’t think this is a return to big price increases.”

The second reason might have to do with the reduction in inventory. The number of homes for sale has been on the decline for years, leading to a much publicized housing shortage in many parts of the country. Low inventory and high demand tends to drive prices up as more buyers compete for fewer houses.

And, after the pandemic hit, available inventory has plummeted. Some estimates put the decline of annual inventory at upwards of 17% compared to last year. Meanwhile, according to the Realtor.com data, the number of new listings has plummeted by a whopping 43.1%.

People are pulling their homes off the market, or waiting to list them because they’re worried about their own economic prospects, concerned with moving during such an uncertain time, or believe that the health risk of having strangers visiting their property isn’t worth it. In any event, listings have slowed, which has helped keep prices of homes that are on the market fairly high.

So, despite the constant deluge of health and economic news, home prices appear to be holding steady. This is good news for anyone who is considering selling, or wants confidence that they’ll be buying a home that has value. It might also give buyers and sellers an edge in a market where many others are choosing a “wait and see approach.”

As always, if you’re thinking about buying or selling a property, or have any real estate questions at all, don’t hesitate to reach out. Even during these difficult times, there are still great opportunities for sellers and buyers.

If you or someone you know is interested in buying or selling Oakland County MI real estate, please give Tom a call today at 248-790-5594 or you can get in touch here.

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Call: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

Price-7 Pricing Myths You Need to Get Past If You Want to Sell Your Home

Price-7 Pricing Myths You Need to Get Past If You Want to Sell Your Home

When homeowners are preparing to put their properties on the market, one aspect is usually foremost in their minds: money. Setting the asking price accurately can mean the difference between getting an offer quickly and having a house languish for months, drawing little interest.

With that in mind, it’s important that potential sellers block out a lot of the noise that often surrounds the intricate art and science of pricing. There are plenty of myths that may cause sellers to lose sleep at night as they attempt to separate fact from fiction.

The following are statements that can stand in the way of a successful sale.

1. ‘If we keep waiting, a better offer will come along!’

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When sellers receive an offer from the first showing, they may be skeptical or hesitant to accept it, wondering if other prospective buyers would be inclined to pay more. Thoughts of potential bidding wars could cause sellers to want to wait and see who else falls for their place. But, remember the old adage, “A bird in the hand is worth two in the bush?” There’s no guarantee other would-be buyers are waiting around the corner. If the offer is a fair one, entertain it and count your blessings.

2. ‘Getting an offer right away, means the agent priced it too low!’

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When sellers receive an offer early in the process, as excited as they might be, many can’t help but wonder, “Should we have asked for more money? Did our agent price it too cheaply?” While it’s natural to be skeptical (and even a little greedy), receiving an offer on the early end of the spectrum most likely means your home was priced accurately and attractively. If you trust your agent, you know he or she didn’t pick a number out of the sky, but rather based it on extensive market research. So, be glad your sale is moving in the right direction.

3. ‘We should price it so there’s room to negotiate!’

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Let’s be honest: Most sellers would love to get top dollar for their homes. But overpricing it with the intention of being willing to accept a lower offer may just leave you empty handed in the long run. Plus, if you have to drop your ask multiple times, buyers may begin to wonder what’s wrong with the place — other than the price, that is.

4. ‘That’s not what my Zestimate says it’s worth!’

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Have you ever noticed how homeowners are eager to believe Zestimates or other automated valuation models when that price exceeds their expectations? Yet, when the opposite happens, they assume it’s outdated or erroneous information? The point we’re making is, these numbers can be inaccurate, so again, trust your agent over the Internet. Enough said.

5. ‘We can add all renovation costs to the asking price!’

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Sellers may adore the improvements and renovations they’ve made and want to add in those costs to the asking price. But remember, not every change is going to land a huge return on investment. If you’re curious about what you can expect on those fixes, check out Remodeling Magazine‘s annual ‘Cost Versus Value’ report to get an idea of which upgrades yield the biggest bang for your buck. Also, as you’re making changes, bear in mind that the infinity pool you view as an asset may just seem like a huge liability to a buyer.

6. ‘My Realtor® overpriced my house to make a larger commission.’

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Agents are paid a percentage of the selling price of the home. However, even if they were to raise the ask by $25,000, in most cases that would yield an additional $1,500 in commission, which would then be divvied up between the broker the agent is working for and the buyer’s agent, leaving your agent with less than $750 more in his or her pocket. It’s hard to imagine an agent would blow a potential quick sale — and take on weeks or months of additional showings and marketing expenses — for a few hundred dollars.

7. ‘Reducing the price is a sign of weakness!’

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While no homeowner is eager to drop the listing price, if time is passing and there’s been little interest, it could be time to consider lowering the ask. Remember, time is money. While you’re waiting for someone to meet your price, you’re still paying the mortgage, taxes, utilities, and insurance etc. Plus, sometimes, lowering the price can put your home in front of a group of new buyers, which could generate a lot more interest and, ultimately, get the price back up closer to where it was in the first place.

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