After seeing how on fire the Michigan real estate market is, I bet you’ve been leaning on the question, what is my Michigan home worth? Well today’s your lucky day, because I’m going to answer that, right now.
This blog is a direct transcript from the video below. This comes in 3 versions: You are able to watch the video, read the blog for your convenience or listen to the audio experience (which is linked under the video below).
So what is my Michigan home worth?
A question that gets increasingly harder to answer as the years go on, as endless services and companies like Zillow, trulia, and Realtor.com all create home value estimators and “zestimates” to give homeowners out there an idea of how much their home is truly worth, while attempting to skip the middleman, the Realtor. Let’s pick on Zillow for a second.
They created “zestimates” using their “unique algorithms, which collects and compiles property data from not only the public record, but user-submitted data as well. I have read from numerous sources and experienced myself that they tend to be off upwards of 7% and beyond. Which is a HUGE amount, especially if you’re a seller wanting to profit as much as possible.
All that just to say, don’t skip the middleman in this situation. It’s not “Convenient” it’s actually doing more harm than good. Giving you false hope, or making you feel like you don’t have as much equity in your home as you actually do. So if you’re in Michigan (around the southeast area), feel free to reach out and I would be happy to do a complimentary home analysis for you. Feel free to hit the link in the description below to be redirected to my website where you can enter information to allow me to do just that.
What does this home analysis consist of you may be wondering? For Realtors, they reference the Realtor’s Property Resource or RPR, which is a resource created by the National Association of Realtors to create an idea of approximately how much a home could sell for based on MLS or multiple listing service data with a 1-5 star confidence rating. Think of it as a Realtor’s zestimate with a little more accuracy. It’s a starting point. At that point, A Realtor will go on the MLS and look up active, pending and sold home listings within a mile radius or so from the subject property. Then finer details will be put into place. Oftentimes I hear about homeowners who perform their own home analysis without considering the property itself. If a Zestimate tells you your home is $200,000. That doesn’t mean a home for sale right now for $200,000 is comparable to yours. You need to compare the home style (colonial, ranch, multi-family, etc.) because you don’t want to compare your open concept ranch to a split level home. Split level homes are already less desirable based on the amount of stairs and the lack of seamlessness in the home. At that point you could be undercutting your home’s true value.
So here’s a couple rules of thumb:
The listing age. When doing a comparable market analysis, it’s important to use properties that were listed within a 6-12 month time frame. If you’re finding hardship in getting comparables within 6 months, jump it to 12 months. If you’re in an area that’s full of inventory, I like to start at 30 days, because a freshly sold home is a golden comparable for you, and with the real estate market changing more than I change my clothes, it’s best to be as newly sold as possible.
That’s why when a home in your neighborhood sells, that is very similar to your home, and the price tag has you drooling, it might be a good time to consider your options, because that could be an opportunity you don’t see for awhile.
For example, the real estate market during the pandemic has created a lot of pent up demand and buyers are getting into bidding wars and pay 10, 20, 30, or 40,000 dollars over the asking price. At that point you can use that home as a comparable for a little while, because an appraiser will be seeing that home that sold as well. It’s just best to act on it sooner rather than later.
The homes age. You’ll want comparables to be within 5 years of age with your subject property.
The type of home. Like I mentioned, filter ranches, colonials, townhomes, multi-family, etc. It will help you get the most accurate price.
Beds and baths. This is one of the more common filters to determine comparables. Again, that doesn’t mean you should look up a 3 bedroom, 2 bathroom and take that price to heart. Typically when your home has a half bath, you can round up or down to a full bath to expand your search. For example, a 2.5 bath home could have a filter of 2-3 bathrooms.
Garages. Garages are an important feature for a home. So if you don’t have one, try not to compare it with a home without one, unless you have a pole barn that offers a similar amount of space.
Acreage. In the city, this filter doesn’t matter so much, but when there are homeowners on 5,10,15, 20+ acres, it’s something you’ll want to filter. Land is a hot commodity since they don’t make it anymore and with homes on that much land, you can bet it’s a selling point. So if you don’t include acreage in that situation, you’ll definitely undercut your listing price.
Pool or lake. This may sound like a given, but there have been a lot of people who didn’t understand the value these two features provide. If your home has a pool, account for it. If it has a lake, definitely account for it, because it takes a simple google search to see that a 2 bedroom, 1 bathroom house on the lake will go for boat loads more money than a home like that not on a lake.
Last but not least, if there are results after all these filters, factor in the neighborhood. The goal is to try and stay within that same neighborhood as the subject property. A lot of times it isn’t always possible, but it’s a clear indicator on how to price your home (or a starting point). If you can’t set your parameters to 1-2 miles from the subject property.
So what if you can’t find anything that pops up when you utilize the filters I mentioned? If you need to widen your search, use these four filters to do just that: square feet, age, location, and listing age. These filters will at least give you a good benchmark to start.
Cheers,
Andrew
Andrew McManamon is a Michigan REALTOR® with Signature Sotheby’s International Realty and provides real estate services to Buyers, Sellers and Investors throughout SE Michigan including Livingston County, Oakland County, Washtenaw County, Genesee County & beyond. Andrew has become one of the rising stars of Michigan real estate agents. Prior to his real estate career Andrew was responsible for managing a senior living facility in Brighton, Michigan as a dining supervisor and an activities assistant. Andrew’s passion to help people is unlike any other, and he continues to strive to be best resource he can be. Andrew graduated from Cleary University in Howell, Michigan with a double major and currently resides in White Lake, Michigan.