Selling Your Home? How to Price Your Utah County Property
Coming up with the right sales price is one of the most tricky steps in selling your home. You obviously don’t want to list it for too much money, or it will never sell. On the other hand, its important you don’t sell yourself short and miss out on thousands of dollars. Rather than just trusting your gut feeling, we highly recommend taking a more analytical approach. There are 3 core methods for coming up with the best price for your Utah County property. Depending on if you’re trying to sell a family home, rental apartments, or refurbished unit will determine the appraisal method you select.
Standard Market Analysis
This method is almost always going to be used for a newer family home. This is where you’re going to look at the sales patterns of other similar properties. While this might sound easy, there are a few important rules to follow. Because the real estate is always in a state of fluctuation, it is important you look at properties that have sold in the last 6 months. If you pull info from houses that sold before that, there’s a good chance the data isn’t going to be accurate.
We also know the location and quality of surrounding houses can have a significant impact on the price you’ll get from your property. That’s why it is extremely important only look at the sales data from the closest homes as possible. When using the market analysis method, we highly recommend getting info from at least 3 other properties. Looking at any fewer than that will have too small of a sample size to generate accurate data.
This method for appraising a property is much more complex than the typical market analysis. The Cost Approach is going to be used when a piece of real estate has been recently renovated. This will make sure the money you invested updating your kitchen or adding a swimming pool will be factored into the final listed price.
The first step to the cost approach is to determine the cost of replicating the property. If you want to be really accurate, you should look at the price of the specific materials used in construction. When we say cost of replicating, it doesn’t need to be exactly the same as the old property. What we want to look at is the cost of producing a property that delivers the same amount of value.
After we’ve come up with the reconstruction costs, there are only two more steps. Seeing how this isn’t a brand new home, we need to factor in the amount of depreciation we can subtract from the property. Once that’s complete, the final step is to add the value of the land where you property resides.
The cost approach can be a little tricky. If you have a property that fits into this method for evaluation, we recommend contracting with an expert. As we all know, getting your listing priced correctly is extremely important. It’s better to spend a few hundred dollars on an accurate appraisal than list it too low and miss out on some serious cash.
The last method for evaluating your Utah County property is called the income approach. This should only be used when the property is producing some kind of monthly income. This would be used for any kind of investment property, rental, or office space. The first step to the Income Approach is to determine the gross income. This would be done by adding up all of the monthly income.
Once you have that figure, you need to factor in the vacancy rate. Lets say your property isn’t filled one month out of the year. In that case, you would take the monthly revenue and multiply it by 12. You would then subtract one month of rent. After that, you need to factor in the yearly operating expenses. This will give you the properties net income. The last step is to factor in the capitalization rate. That means the percent of profit you want to make off the property. Once you have that in place divide the net income by that rate, and you will be left with the correct listing price.
We hope this post has been helpful for determining the correct price for your property. If you have any questions about anything or need any help with any of these steps, we would be more than happy to schedule a free consultation where we can meet.