WHAT IS MY PROPERTY WORTH ?
You want to sell your home. Naturally you want to get as much as you can for it. You would definitely like to get as much out of it as you have invested into it.
Understanding the market- when you bought and when you are selling has a lot to do with getting the most for your home. If you bought in a high (sellers) market and it still is, you will probably get a reasonable appreciation per year. However if it is now a depressed (Buyers) market, and prices generally have come down 5 to 10% a year over the past few years then a sure way to lose more money on your investment, is to try to recoup your total investment, or to price your home for the Market “that WAS” when you bought your home instead of “that IS-today. The important thing to do is find out what the market value is for your house in the CURRENT market. This depends on several factors:
- Supply and Demand: This is largely what drives anymarket and must be looked at
- By location- (some locations attract more buyers)
- By price range- (Typically the higher the price, the fewer number of buyers there are)
- By- (The style, quality, flow, and condition of the house and yard.)
Large vibrant cities typically have bidding warsonhomes because of a high demand and asmall supply. In the Lakeside area, is has been a Buyer’s market for several years for several well known reasons, with about a 3 plus year supply of homes on the market. This is not because the homes are not good homes- it is because there are fewer buyers than previously, a lot of choice and even some fine homes will stay on the market for years, if they are not priced for the current market. The attached CHART # 1, shows generally the percentage of interested buyers will look at homes that are over and underpriced by 10 and 15%.
CHART # 2 shows what happens when a home is initially priced high and typically follows the market down- normally through necessity and/or frustration. If the house does sell it sells at below the market value for the reasons shown.
Establishing the MARKET VALUE:
This is not necessarily an easy task. Most homes in the Lakeside area are unique, and it is not a simple “one formula fits all” to establish a realistic market value. Some of the information that should be considered include:
- An Opinion of Value: ie Land, size x $/ m2 for the area plus the “Bricks and Mortar”- ie Construction size and quality x $/m2, + extras such as a pool, casita, furnishings (if included), renovations and possibly depreciation. This would be an approximate replacement value which should get you into the “ball park” price wise. (Typically within + or – 50k USD.
- The Competition: In the AREA: ie What is on the market in that area (whether a fraccionmiento or subdivision), within the 50k brackets above. How do they compare. Some will be larger, some smaller- some furnished some not etc. To get a more accurate accessment and comparison your agent should remove the land value, and compare the $ per square meter (of construction). This accounts for different sized homes. This figure x the construction size of your home, provides a reasonable comparison.
The Competition: at LAKESIDE: As there may not be a lot of similar homes in your area, it may be necessary to pick other areas where there are comparable homes and then do the above procedures to improve the comparisons. After all, potential buyers may or may not have a preference for a specific area but with the total Lakeside area being relatively compact, most buyers are flexible on areas if they see a better value elsewhere.
- Reality ! - What has really happened in the market? ie What have properties really sold for? – in the AREA, and in LAKESIDE :
Some agents (not all because it is by paid subscription) have access to an easy and quick to use , powerful STATSTICS program that allows an agent to investigate what has happened in the Lakeside Real Estate market by area, time frame, price range and many other features. This provides averages for DOM (Days on the Market- average discount, lot size, and construction size. The formula is slightly different from the one used above but once the average $ / m2 is obtained (this includes construction and land), an EQUIVALENT SELLING PRICE of your home can be calculated.
With these, at least three above scenarios that look at the market value of your property with different techniques, you should be able to have a fairly accurate idea of the TRUE MARKET VALUE of your property. Pluses and minuses can be used for some items – but flagrant deviations will be noticed by both other agents and potential buyers and once agents perceive a property as overpriced they are unlikely to add it to any showing list for their clients. With probably the best MLS System in Mexico at Lakeside (there are not a large number of them), about 50% of the homes sold are by the non- listing Agency, so marketing and appealing to them is critical.)
There are approximately 100 MLS agents in the Lakeside area. Looking at CHART # 3 will show the typical Activity of a Listing vs. Time.
It is the early days in a listing when Agents and their Clients make their Judgement on the Value of a Listing. This early time is the most important to have Your Property priced properly. Otherwise the Activity shown in CHART # 2 will most likely take place. Although these graphs originally were prepared from US statistics, we have seen many examples in Lakeside that confirm the information.
CHART # 4 shows what happens with the “Let them make an offer” scenario when a property is initially overpriced. With a market in this beautiful Lakeside area that is only lacking in a sufficient number of Buyers, can any seller afford to dismiss a percentage of serious Potential Buyers.
In summary: to get the Best Price for your Property:
1-Establish as true a Market Value as possible- with
2-An Opinion of Value
3-What is the Competition- ie What is Comparable on the Market?
4-What is the Market- ie What comparable has sold?
Arriving at the above figure, does not necessarily translate into an easy sale, but it is a critical first step. There is still Marketing- photos, videos, visual tours, placing your property on up to a dozen web sites, advertising, social media, showings, open houses; much with follow-up and feedback and if and when an offer is made,- negotiation.
We hope this has been helpful.
Don Wright- P. Eng., Sales Associate- Hernandez Realty Group Wright Team Mexico
.. For an example of Excel Spread Sheets showing typical format and figures please just ask through our CONTACT US form on the right border.