What Every Baltimore First Time Home Seller Needs to Know in the 2021 Real Estate Market
So, you jumped into the Baltimore real estate market as a first-time buyer a few years ago, and now you’re thinking about selling. Well, why not?
We are in the middle of one of the hottest seller’s markets in recent history so now is actually a perfect time.
Here are the categories we will cover:
✔️ Pricing
✔️ Listing
✔️ Staging
✔️ Fees
✔️ Showings
✔️ Contracts
✔️ Inspections
✔️ Buyers
Warning: we’ve got a LOT to say on this subject, so we’ve broken this up into two separate posts. Here we go!
Pricing
Let’s start here.
The price of your home is NOT the following:
What you (or your well-meaning friends) think it’s worth,
What your neighbor’s house sold for,
Your purchase price + the amount you have put into improvements, and
Especially NOT The Zillow “Zestimate.”
Rather, the price of your home is directly related to how much other similar homes have sold for in the last six months (more on why six months in a minute). In the biz, similar homes are called “comps,” short for comparables.
One critical aspect of comps is comparing to homes in your same neighborhood, or close by neighborhoods that are in the same exact value tier. Take Lutherville-Timonium, for example.
The 21093 zip code is large and has an extremely diverse set of real estate offerings: examples include a $200,000 condo in Mays Chapel, a $350,000 townhome in Wellington Valley, a $450,000 rancher in Luther Village, a $650,000 single family home in Seminary Ridge, or a $1,100,000 home in Jenifer Ridge. Many online valuation tools use zip code level data to provide you an estimate, and you can see from this list why that isn’t so helpful!
Comps must actually be similar to your home; for example, if you have an older kitchen, you can’t compare your home to one that just sold with a brand new kitchen, even if it has the same number of bedrooms & bathrooms. Your comps will typically be in the same general area with the same public schools, similar square footage, similar acreage, and similar updates & features.
Now, back to the reason you can only compare your home to those that have sold in the last six months… There’s a reason for this, and we’re sorry if you found a comp in Towson from two years ago; that’s just not going to work. Here’s why: your buyer will typically be taking out a loan to purchase your home, but first the bank needs to make sure the amount they are loaning the buyer is in line with the actual value of the home. Enter: the appraiser. A real estate appraiser will come to your home to gather detailed information about it, and will then compare it to - you guessed it - other similar homes that have sold ONLY in the last six months to be sure that it makes sense for the bank to lend money to the buyer. So all of this is important to understand before we actually discuss how to price your home.
There are two ways to price a home:
1) Priced to sell, and
2) Priced to sit.
Can you guess which is better for you as the seller?
An overpriced house will sit on the market for a longer period of time, even in a super prime Baltimore location! And in real estate, the math works like this: fewer days on market = a higher sale price. In other words: more days on market = a lower sale price.
See how that works? The more a house is overpriced, the longer it will sit on the market, and then buyers will think there is something “wrong” with it so they won’t want to make an offer. So it continues to sit… you get the point.
In summary, here’s your quiz. Which house sold quicker?
A. The Hunt Valley seller who wanted to just try for a higher price even though the comps said otherwise,
or
B. The Towson seller who listened to his agent and priced at the low end of the comps?
Yup, you guessed it! Seller B sold their Towson house in two days, received multiple offers, and actually got 10k over asking price in the end.
See our next post to hear about all the rest: listing, staging, fees, showings, contracts, inspections, and dealing with buyers!
