Have you seen someone list a house for more than you think it is worth? It brings up an important question; what is the best way to determine what your house is worth in the St. Louis area? People often get bad information by relying on the Zillow Zestimate or their tax appraisal. Here are some of the ways to help you determine what your house is worth in the St. Louis area.
CMA Report
A CMA (Comparative Market Analysis) is by far the best tool to determine what your house is worth. The best way have this report completed is with the information from the MLS (Multiple Listing Service). The bad news is if you are not a real estate agent, you will not have direct access to the MLS. The good news is that there are indirect ways you can get the information from the MLS.
- Ask a realtor to run comps for you – Any realtor should do this for you for free. Make sure to ask them to send you the DETAILED CMA for you to look at, don’t just ask them to tell you what it is worth. Also, don’t let them talk you into signing an agreement to represent you to do it. An honest realtor will not try to make you feel obligated to work with them for doing a simple CMA.
- Look at sites that pull information from the MLS – Websites like Zillow, Realtor.com or Trulia will all pull information from the MLS. You are basically going to make your own CMA here. There are a few things you MUST do to make sure that your are getting accurate comps your home.
- Get Properties that have sold in the last 90 days – you need your pricing to be accurate, and pricing changes with time. The longer ago the house sold, the less accurate a comp it is going to be. Stick to 90 days if you can. If there are no good comps for 90 days, go back 6 months at the most.
- Stick to a small radius – Property values are very LOCAL, meaning from one street to the next can make a BIG difference. For example, my neighborhood is technically broken into two neighborhoods (although you would think it was one just driving around). What is important about there being two neighborhoods is that houses in one of them sell for about $20 per square foot more!
- The houses must be identical – when they are not identical, you must adjust for this. A house with 4 bed/2.5 bath at 2,600 square feet cannot be compared directly to a house that is 4/2.5 at 2,400 square feet.
Lets take those two houses above for example and determine one of the adjustments:
If the 2,600 square foot house sold for $300,000, then the $/Sq ft is $115.38. This means that if everything else was in identical condition, a good price estimate for the second house would be $115.38 x 2,400 = $277,000.
But what happens if the second house also needs some repairs? Lets say for example the first house had a new roof, an updated kitchen and had hardwood floors. We will need to adjust the second house based on those needed updates:
- Price Estimate for Square footage = $277,000
- New roof – $10,000
- New Hardwood floors – $10,000
- Updated Kitchen – $25,000
- Total cost to update – $45,000
- Value after condition adjustments – $232,000
So after adjustments, the second house would be valued at $232,000 ($277,000 – $45,000). You should feel very confident that $232,000 is what your house is worth in The St. Louis area.
Appraisal
This is the most expensive way to determine your home value, but based on your experience, and resource access, it may give you the most accurate estimate. An appraiser will set you back a few hundred bucks, so make sure to look around to get the best one for your area.
Online Calculator
There are sites that offer some sort of calculator for the price your house is worth. These can be useful to give you a ballpark idea of the value, but they will not be as accurate as the CMA. Additionally, because they use different algorithms for each site, you should take an average of a few different ones. The one I like best is actually through Chase.
- Caution With Online Calculators/Estimates
Home value estimates like the Zillow Zestimate can be quite inaccurate, if you take it at face value. The Zestimate is an algorithm that works by pulling data from the MLS to determine comps for your house and then calculates your property value. So why is this not accurate? The problem here is that it doesn’t take into account the actual condition of your house, it just looks at the sales prices of the houses around it. In the example we worked out above, the Zestimate would probably say your house (actually worth $232,000) is worth $280,000.
Property Tax Appraisal Value – This has the same issue as the Zestimate. Since the appraiser doesn’t actually enter your house, they have no idea if it is a total mess, or was was recently fully remodeled to look like something on HGTV.
I hadn’t mentioned the most important part yet – the value of your house is based the houses around it. It is easy to overlook this very important truth. If the houses in your neighborhood are selling for less than they did 6 months ago; your house will be selling for less than it would have 6 months ago. Your house value is going to be determined by your neighbors house values, so make sure to keep an eye on the things happening around you.
Final Thoughts
I decided to write this blog after a house in my neighborhood was listed at a price that didn’t reflect the actual value. While it would be nice for them to be able to sell the house fast, there is a large gap between the price, and what it is actually worth. Unfortunately, it will not sell for what they are asking, but hopefully they will not wait too long to drop the price.
As always, If you are ready to sell your house fast check out our company Solace Properties.