We live in weird times. The economy is going down! Or is it improving? Depends on who you ask, and which headlines you believe. Are home prices declining – or have they stabilized and are now heading up again?

Drama sells headlines – and homes, too. But if you just want to sell your home, do you know how much to ask and what determines the value?

It's the market.
Very simply put, it’s the balance between supply and demand. The market will be driven up by strong demand in relation to the number of available homes. If there are more homes than there are buyers who are motivated and capable to purchase, then the market will slow down. A balance between buyers and sellers - in a given price range - produces a stable market. A buyer for a $600,000 home – about the median single family price - will not be helped by an abundance of 2 million dollar homes!

Fair Market Value.
This is the price your home is likely to sell for. Fair market value means the price a property will actually sell for,  without pressure or desperation from either side. Under these conditions, supply and demand will determine the price the buyer is willing to pay and the seller willing to accept. Other types of valuations that do not determine your home’s value are:

• Appraised value - usually just for the buyer’s mortgage lender
• Assessed value - for property tax calculations only
• Investment value - based on cash flow of the property
• Asking price of area homes  - until they sell, there is no proven value

Comparable Sales
Also known as "comps", these are the homes that have actually sold. You need to know what homes like yours have sold for in your neighborhood during the last 3- 6 months. If you are hiring the services of a Realtor, you have a professional to give you a detailed analysis of the neighborhood sales and listings, and suggest a price range. Location is everything, so be sure that the homes you compare yours to are located nearby and with similar features. If your home is the best one in the neighborhood, its value may actually be brought down by those around you, but if it is surrounded by higher priced homes, the neighborhood will tend to pull up the value.

You Are Biased!
It is human nature for sellers to think their home is worth more. That’s OK since you selected it for some very good reasons. Sellers are emotionally involved in their homes and not likely to be an objective judge of value. You do not see the flaws and place too much value in minor improvements - like the fresh yellow paint in the kitchen or the brass chandelier. There is also a tendency not to see what needs to be done to sell.

Move In Condition
This is what most buyers want. Almost no one really wants to renovate unless they are buying at a bargain price. For the top value, the main systems of your home should be in good condition and up-to-date: roof, foundation, plumbing, electrical, and drainage are the crucial. Other features are also important but won't make up for poor maintenance. Some of these are: Curb appeal, view, accessibility, parking, floor plan, outdoor space, and finishes such as flooring, cabinets, and counters. Buyers will make generous deductions in their offer price for needed updating and repair.

Clutter, junk, untidy rooms, and dirty windows make an impression of poor repair. It’s a great opportunity for buyer’s with vision to make a lowball offer, even if there is nothing really wrong. Buyers can be overly swayed by cosmetic appearances and lovely furnishings and décor which create an attractive but superficial image. So why not make that work for you if you are a seller, and reap the rewards of a higher price?

Reality Check: These Determine Value

• Comparable sold properties
• The condition and appearance of your home
• The urgency of your sale
• Availability and cost of financing such as interest rates
• The competition in your neighborhood

Fantasyland : These Have No Effect on Value

• Your original purchase cost
• What you spent for improvements
• Reproduction cost
• Assessed tax value
• How much you need to get
• List price of other homes
• Your emotional feelings
• Your lucky number

Risks of Overpricing
Why not start at a higher price "just to see what will happen"? You will delay the sale, discourage serious buyers, and lose the momentum of being a new listing. You will get the most showings during the first two weeks. After that, many buyers look only at the new listings so you may lose the opportunity to sell. Or your property could be shown just to sell another better-priced one. Experienced Realtors do not want to waste their time, money or reputation on overpriced listings. The big loser will be you, the seller.

If hundreds of buyers have seen a home on the Internet and in person and it’s still unsold, that means it is priced too high, or it needs a serious makeover, or both!

Not A Science
If you ask several Realtors or appraisers you will get different opinions of the value of your home. Pricing is not an exact science! Price per square foot is useful for condominiums, but less so for single family homes. In older Island neighborhoods the value your land is greater than the value of the house. If your home is larger but the lot is smaller, you may not get more for it.

Make sure your home's charms are not hidden Most buyers make a judgment within the first 30 seconds. And remember, a charming price will make up for just about anything else!

If you are considering selling and need an expert opinion about the value of your home, feel free to email me at stephanieg@remax.net. You can also find information on getting ready to sell on my web site at www.hawaiihomehelp.com.

Article © 2011 Stephanie Gieseler, Honolulu, Hawaii. All rights reserved.