Home Valuation

The most critical variable in the process of marketing your home is the price tag that you put on it. You can do everything else perfectly-fresh paint, great staging, perfect photography, great advertising, perfect real estate agent representation-but if it isn't priced right, it won't sell. This is good news-why? Because this is something that you control-you set the price.

When setting the price for your house here are 4 things to consider:

One: Knowledge — It is imperative to have a real estate agent who understands the current real estate market in your neighborhood, and its key to have a time-frame for selling.

Two: Valuation — Homes are difficult asset to accurately value. However, there are certain metrics that can help.

• Market Comparables, try for at least 10: 5 properties that are currently on the market, and 5 homes that have sold within 6-8 months. Its best to pick recent homes sales in close proximity to your home with similar attributes.
  • In many parts of Marin County, we don't live in "cookie cutter" neighborhoods; we live on hills, with different: slopes, views, exposure to sun light, privacy, access etc;
  • The deeper one gets into this evaluation, the trickier it gets as we enter the difficult realm of trying to value the difference in, say-- the slope of a lawn, or one floor plan to another, or discounting one home due to its tile, instead of marble, floors etc.


• Price Per Square foot: We can take our 5 recent market sales, and our 5 active properties and back into an average price per square foot for both.
  • Take the selling price of each home, divide it by the published square footage of the property as shown in the tax records


• Compare these "Market Comps" to your home
  • Work with a real estate agent that knows the "comparable" properties, and who has seen your home. There will be notable differences that will help price your home such as:
    • Well, 'Market Comp One' had an illegal 1,000 square foot basement that the former owners retrofitted without county permission so the house is actually 1,000 sq feet larger than advertised; so the price per square foot is actually X instead of Y.
    • That one had a great floor plan, with amazing views of the city and great sun all day long, and a pool, but no lawn
    • 'Market Comp Four' sat in the shade all day, no views, but it was new construction and kids could walk to school
  • Your home compares favorably to the 'comps' for these reasons, and unfavorable to the 'comps' for those reasons.

Three: Be Realistic — Fortunately for all homeowners, the real estate market has performed miraculously well over the last 15 years. The perfect confluence of low interest rates, rising incomes, a soaring stock market, and gentrification of the city and suburbs has created a mindset that home prices will always go up.

In Marin County California, the average home price in 1970 cost approximately $38,000. In 2007, the average home price was just over $1,200,000 for an average yearly compounded price appreciation of just under 10%. At the same rate of appreciation, in 20 years the average home in Marin would cost over $8,000,000. Similarly, at the same rate of appreciation, a house that sells for $2,500,000 today would sell for over $16,000,000 in 2027. This is unlikely!

What is more likely —

• Assuming a stable economy for the period, for the next 10 - 15 years, home prices in desirable locations (such as Marin) will increase at a slower rate, perhaps 3- 5% per year.


• Other parts of the country that have seen similar rapid appreciation without the economic infrastructure for people to actually maintain their loans at current levels will see falling real estate prices until the areas average wage intersect with what the average resident in the area is willing to pay to own a home there.


• If the country slips into a recession-- Our economy is operating at "full employment"-- an economic concept which basically means that everyone who wants a job can find one. If there was a major shift in the employment rate — as a country, state, county, city-we wouldn't be able to maintain the same debt loads we have amassed, and people would have to sell assets to pay off debt. Real Estate prices would come under increased downward pressure.

Four: Pricing & Selling Price are different. Analyze the comps, look at the average price per square foot, and work with your agent to set the price. Once you have determined the general price point of your home, subtract 5% or 10% to increase buyer traffic through your home. Key Point, you are not setting the selling price of your home — only the market can do that, pricing is nothing more than a key component of the marketing process.

Last, if you have read through this short essay, you owe it to yourself to call us. We have one of the best listing packages in the county and would be happy to talk with you about your goals, and potentially listing your home. We have an 8 Step marketing plan, a 7 step advertising plan, and a 4 step online marketing plan that leaves no stone unturned. Additionally, Frank Howard Allen has the greatest exposure to global real estate buyers of any Marin Real Estate Company through a strategic online affiliation called Global RE.

Additionally, as a Certified Financial Planner (CFP), Dave has done financial planning for over 50 families in the home buying and selling process including financing retirement, college, another home purchase, health & senior care, or all of the above with the proceeds from a home sale. If any of these concern you, there isn't any realtor in the county that can help you the way we can; and/ or, we can work directly with your CPA or financial advisor to coordinate the accomplishment of these financial goals.