Wondering if it’s the right time to list your investment property or residence? Then it's time to evaluate the state of the real estate market in your area. Doing so will do two things. First, it will give you an idea of how long it will take you to sell. Second, it will help you pinpoint a competitive list price that gets you the best possible return on your investment. Follow these four easy steps to gauge your local market.
Get the big picture for home sales in your area:Check out the real estate trends report that The National Association of Realtors publishes each month. You can select your city and view the median age of homes on the market, number of homes for sale and average price of homes in your area. The report also shows which figures have gone up or down over time so you can get a sense of market trends.
Zoom in and look at comparable homes:Comparables, more commonly referred to as “comps”, are an old real estate market analysis stand-by. Comps are recently-sold homes in your area that are similar in style, size and age/condition to your home. If you take a look at how much similar homes are selling for, you'll get a feel for the competition. This is a great way to get a ballpark idea of how you should price your property to be competitive in the market.
Use our free seller pricing worksheet to simplify the process: Download your copy here.
Calculate how fast homes are selling:Perhaps the best way to tell what the housing market is doing is to calculate the average number of days a home is on the market before it sells. The real estate metric for this stat is DOM (days on market). It's powerful tool used by real estate professionals and seasoned real estate investors to measure demand in a real estate market. You can look up the DOM for homes in your area on websites like Zillow and Trulia. Simply find a few comparable homes, then calculate the average DOM for homes in your area.
Analyze your findings:Gather all of your research together and take a look. Are comps in your area selling at prices below the assessed value? This could indicate a housing recession. Are homes selling much faster than usual according to the real estate trends report and your DOM calculations? Then you could be in a booming seller’s market, and might be able to sell your home more quickly and easily for the price you want.
By looking closely at the market in your neighborhood, homeowners and investors will have a stronger sense of what to expect from their sale and how to effectively price their home.