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What is Your House Really Worth?

October 10, 2020 | Claire Tak Claire Tak

Finding out what your house is worth depends on how you plan to sell it. A home’s value depends partly on who you sell it to and why. 

There are many different ways to sell your home. The method you choose may depend on how quickly you need to move and of course, what your house is worth. 

The price of your house can be determined by figuring out the following: 

  • Price history: Your home’s past value can be found online through home buying sites. 
  • Tax assessments: The basis for which property taxes are determined. In some areas, property-tax assessments are the same as determining fair market value. The assessor looks for homes similar to yours that sold recently and takes the average sale price to set your home’s value. 
  • Bank appraisals: A professional appraiser determines your home’s value. This is used whenever a mortgage is involved
  • Comps: The price of similar homes in your neighborhood (usually within a ¼- to ½-mile radius). Looking at the most recent data—usually within the last six months is important, as appraisers don’t look at comps that are older than three to six months.  

 

Your goal is to get as much as you can, but your house is only worth what someone ends up paying for it.  

Pros and cons of using real estate agents 

There’s no rule that says you always need to use a real estate agent to sell your home. 

There are definitely pros and cons to working with an agent, but you should consider other options if you want to keep as much of your home’s sale price as possible. 

  • Pro: You may be able to get more eyeballs on your home and therefore, sell faster.
  • Con: Real estate agents have a commission fee of 5 to 6 percent of the home’s final sale price. If a home sold for $200,000, a real estate agent cut would be $12,000. 

 

Today, there are investors who buy homes in cash, including off-market buyers like Sundae. You could try selling it on your own, also called for sale by owner (FSBO). 

So what is your house really worth and how do you know if you’re selling it the best and most efficient way?

See also: What’s a Fair Offer Price When Selling a Home?

Emma’s story: Moving to a senior community and selling her house

Emma, who was in her retirement years, heard about selling to an off-market buyer (like Sundae) through a relative. She considered listing with an agent, or selling to investors and iBuyers. She ultimately decided to sell to Sundae. 

The main reason Emma wanted to sell was because she wanted to move to a senior community. Her home was two stories and Emma found it physically difficult to climb up and down the stairs—she was ready to move quickly. She didn’t want to spend a ton of time or effort trying to sell her house. 

Listing on MLS

MLS stands for multiple listing service, and has been the main website real estate agents use to sell homes. MLS is a way to see listings and for real estate agencies to collaborate by sharing properties. Anyone who is linked to MLS can market the properties found there. 

Even though you have to be a licensed real estate agent to access MLS, you can list your home on your own without an agent. However, you’d have to buy a Flat Fee MLS Listing

Emma considered selling her house the traditional way on the MLS. She initially planned to use a real estate agent, but decided against it because she did not have the time or energy to get her house in market-ready condition. She preferred going with a direct-to-seller offer because she liked the smooth and easy process. 

Another route for Emma would have been listing the home as is, but there is uncertainty as to when her home would sell and how much she’d get. 

  • Bottom line: You’ll typically get the highest amount possible for your house by selling on the MLS. However, the realtor commissions and closing costs will cut into your net proceeds. Further, you’ll have very little control on the process and how long it takes. 

Selling to an iBuyer  

An iBuyer is an organization that uses technology and data to make an instant offer on your house over the internet. 

iBuyers have created a shift in the real estate industry and the way people buy and sell homes. Because the process of selling a house can be long and stressful, iBuyers are able to speed up the process of sellers offloading their homes quickly to an all-cash buyer

However, most iBuyers look for properties that are turnkey. Unlike other flippers, iBuyers aren’t looking for homes needing a lot of work, or distressed sellers. Although Emma’s property was in good shape, it wasn’t fully updated. 

  • Bottom line: iBuyers may be able to speed up the selling process of your house, but they are also looking for turnkey homes. They also tend to have fees attached. 

A real estate investor

Investors are people who want to purchase homes, make updates, and then sell it to turn a profit. You may be wondering, what’s the difference between an investor and Sundae? 

A professional home investor is either an individual or a company that buys residential properties as part of a business or investment strategy. Individual investors may own just one or two investment homes. They usually either keep and rent them out or renovate them and quickly resell

Investors may be a team of two people or a company, and because of the fluctuations in buying power, size of the organization, and knowledge, they may not be able to offer you as much for your home. According to Zillow, “the offer you receive from a professional investor will almost always be lower than what you would receive from a traditional buyer, especially if you’re selling in a slow real estate market.”

Going this route may also require negotiation, which means you’ll need a real estate agent, lawyer, or other professional who is familiar with selling to investors to help sell your home. 

  • Bottom line: You may not be able to get as much as you’d like for your house when selling to a real estate investor.

Emma’s final decision: Investors vs. Sundae

Emma had a few property investors come out to see her home, but decided to go with the highest offer, which came from Sundae. 

Because of the sheer volume of homes Sundae purchases each month, we are able to offer homeowners a better price. Sundae makes it a point to pay more than most other investors due to efficiency, and taking less profit in the transaction. 

Read more: How to Decide If Sundae Is Right for You

Emma’s call with Sundae

For Emma’s situation, speed and efficiency were important factors and Sundae appealed to her because:

  1. Her home was not updated, and she knew she wouldn’t be able to get as much for it. This is after comparing her home to other, more updated homes in her area. 
  2. She didn’t want to renovate her home before selling.
  3. Sundae offered her the most.
  4. The process was quick—about a week from her phone call to receiving an offer on her house. 

Sundae’s offer to Emma

Sundae offered Emma $445,000 for her home. After assessing Emma’s house, Sundae determined it would cost around $50,000 to get it in market-ready condition. 

Emma didn’t have to update the property or deal with a real estate agent’s commission fees. Instead, she could focus on moving and living in a more comfortable location suitable to her needs. 

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