The process of evaluating a home can be a complicated one. At DOMAINE, we like to take a simple approach with three tools that will give us guidance on where the market value is for a property.
We need to take a step back and look at the big picture. What does the real estate market look like at 30,000 feet? Let’s look at a Single Family home in Portland. Here’s what we need to do to analyze the market in this perspective:
First, we’ll look at the total inventory that is selling.
How many homes are on the market now? How many homes have sold in the last 12 months?
Once we’re able to narrow in on a general price point that both the Seller and Broker agree on, it could be a potential listing price. Let’s say this potential listing price falls between $400,000.00 and $500,000.00 This will help us to identify an absorption rate for this specific market.
In the example below, this absorption rate states that, based on the pace of properties selling in Portland over the past 12 months within this price point, it would take 2.4 months to sell a home between $400-450k and 4.5 months to sell a home between $450-500k. This gives us direction in the market for how quickly the inventory is moving or how slowly it’s selling.
Example: Portland, Maine Absorption Rates
From there, we can make some initial determinations on whether or not we should be pricing the home above $450,000.00 The seller would determine if they want to wait longer for the sale to happen and keep on showing for a longer time until we found a buyer.
The second tool is to look at the past sales over the last 6 months. This is what an appraiser looks for when they do their analysis for the Bank and the Buyer. This price can vary depending on the condition and features of the home.
We can use these market metrics to find the right price for your home.
Example: Portland Sales
With this, we find that the average price is around $239/square foot in our market. This means for a 2000 sq. ft single family home in Portland, we would want to look at a price of $478,000. This does not account for other factors such as condition, location and amenities.
The third tool we can use is to look at the landscape of the local market right now. We encourage our clients to use the local market to their advantage. The Maine Lifestyle is what people are looking for. We are connecting with buyers daily and see that people are looking for a growing community that has rich culture, quality homes and everything else that Maine has to offer.
But, we have to ask… what other competition would we encounter if we put the home on the market in this current environment?
This is a factor that needs to be looked at constantly and a small movement in the price of your best competition can either be a good thing or a bad for the Seller. We’re here to help you make a wise decision when considering putting your home on the market.
Evaluating a home can be a process that can feel overwhelming but it doesn’t have to be. Working with a professional who knows the market well can give you insight that you wouldn’t have otherwise. This is what DOMAINE is an expert in. We know how to help sellers position themselves to make these critical decisions so that they can get to their desired destination. Let us help you through the process.