Investing Strategies


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<p>A good Competitive Market Analysis, or CMA, represents the best way to obtain comprehensive and reliable home-value data. The CMA calculates the market value of a home based on extensive information about the home and the neighborhood, including comparable sales, local schools performance and neighborhood demographics.</p>



<p>A local real estate agent should be able to provide a good CMA. If they don’t already have an agent, sellers can contact an agent using the many available Agent Networks in the US. The CMA should include a summary sheet that identifies an estimated <a href="https://www.realtytrac.com/market-trends/">market value</a>, and an agent can help dig deeper and interpret the rest of the information in the analysis.</p>



<h2 class="wp-block-heading" id="h-strategies-for-enhancing-property-value">Strategies for Enhancing Property Value</h2>



<p>Of course, the CMA won’t take into account any renovations and enhancements to the property, but if sellers are familiar with the condition of other properties on the comparable sales list, they can extrapolate somewhat — with the help of a real estate agent — based on the condition of their home.</p>



<p>A good real estate agent also can give suggestions about making small, even cosmetic, improvements that will enhance the property’s value. Simply planting some flowers or rearranging the furniture or even just making sure the home is clean can make a big difference when showing the property to potential buyers.</p>



<h2 class="wp-block-heading" id="h-avoiding-pricing-pitfalls">Avoiding Pricing Pitfalls</h2>



<p>Traditionally, it’s considered important for sellers to pinpoint the market value of a property being sold so that they can set an asking price that allows them to take full advantage — in their pocketbook — of the fair market value of the property.</p>



<p>When setting an asking price for a property, it’s important that sellers neither under price nor overprice the property. Under pricing was a common pitfall in sizzling markets that have experienced double-digit gains in recent years. In these markets, which are for now a thing of the past, homeowners would underestimate the dramatic rise in value that has occurred since the home was purchased. That led to an asking price set far below market value. And once the <a href="https://www.realtytrac.com/resources/selling-your-home-heres-what-you-need-to-know-about-closing-costs/">asking price is set</a>, there’s no easy way to raise it short of praying for a bidding war.</p>



<h2 class="wp-block-heading" id="h-navigating-market-dynamics">Navigating Market Dynamics</h2>



<p>The consequences for under pricing are somewhat obvious for the seller. While they may sell the property quickly, it’s likely that they’ll end up walking away from the sale with less equity to pocket or to put down for another property. And if they buy another property, they can’t count on other sellers making the same mistake and setting a below-market asking price. <strong>The net result</strong>: they end up losing ground on what is probably the biggest investment of their lifetime.</p>



<p>There’s also a big-picture consequence for <a href="https://www.realtytrac.com/resources/mistakes-to-avoid-when-selling-your-home/">pricing and selling</a> under market value: it will lower the overall value of homes in the neighborhood. This shouldn’t be the number-one concern of a seller, but the neighbors will be thankful if a property sells for full market value.</p>



<p>Sellers should also be careful to avoid the more subtle, but equally damaging mistake of setting a too-high asking price — a more common pitfall in a market with sluggish sales and flat or depreciating home values. Overly exuberant about the rate of appreciation they’ve observed historically for their property, homeowners can fall into the trap of setting an asking price based on speculation, with not a lot of hard data to support that speculation.</p>



<p>If no buyers bite on an inflated asking price, it’s possible to lower it, but that’s a scenario sellers would be wise to avoid. Once the price is lowered, buyers at the very least will assume they have the upper hand in negotiations. At the worst, they may assume there’s something wrong with the property that’s forcing the sellers to lower the asking price. This can end up prolonging the time it takes to get the property sold and lowering the final purchase price below fair market value.</p>



<p>By contrast, if sellers find the happy medium between under pricing and overpricing — with the help of a quality CMA and real estate agent — they’ll be able to move the property in a reasonable time frame and receive full market value from the sale. And that makes for a successful transaction.</p>


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Jessica Morgan is a real estate expert with over 15 years of experience. Starting as an agent, she now provides insightful market analysis and investment advice. Jessica holds a degree in Urban Planning and Real Estate Development from UC Berkeley. She enjoys exploring neighborhoods, renovating homes, and educating others through her writing and workshops.

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Jessica Morgan

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