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Homes and Land in Sunny Sequim, Washington

Homes and Land in Sunny Sequim, Washington

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How to Determine the Price of a Sequim Home for Sale

by Chuck Marunde / Thursday, 23 April 2009 / Published in Sequim Real Estate

Home sellers in Sequim and Port Angeles must price their homes right to sell in this market, but how do they do that?   What is the right price?   Buyers also need to be able to have a very specific idea of what a reasonable price is for a home in order to write an reasonable offer and at the same time not pay too much.

Most people understand that pricing a home is not a mathematical science, and that there is a large subjective element.   But there is a practical approach to arrive at a very realistic range of values and then narrow the price to a specific number.   So while we can say nailing a fair price for a home is as much art as it is science, we actually can approach this intelligently and get very close to what an accurate and fair price would be.

By the way, this is the short version of how to price a home.   There is much more thought that goes into an intelligent and accurate analysis, but this summary will give you a good idea of the process so you can use this approach yourself, or so you can ask good questions as you work through this process.   Don’t assume all real estate agents know how to do this well.   Not all do.   Remember, the answers you get from your real estate agent are only as good as the questions you ask.   Be sure you know the issues and the questions.   You don’t have to know all the answers, but if you know all the questions, you can find the answers or the right agent to help you find the answers.

The first thing I like to look at when I’m going through a home is the cost of replacement.   I look at the materials and floor plan, the excavation, and the features in the home.   Then I look at the cost per square foot to build it.   I’ve learned that to build a nice custom home ranges from $150 per square foot to $300 per square foot.   The cost to build a cracker box home will start somewhere around $75 per square foot and go up from there, but almost all builders who advertise low rates bring the cost per square foot up during construction with extras and “surprises.”   Their contracts are usually open-ended, which means they can add to the original price.

The cost of replacement is just a starting place.   This isn’t the ultimate answer to value.   It’s good to know right away how much it would cost to build this home on this lot.   Now tuck that number in the back of your mind.   (You might need help identifying the cost per square foot for a particular home, because it will depend on floor plan, quality of materials and workmanship and so on.)

Next, I like to look at the property data at the Treasurer’s office.   Assessed value is an interesting number, but by no means is it always accurate.   While the assessed value is supposed to be 100% of its current fair market value, it rarely is.   The square feet shown on the county records are not always correct.   Many people have added a room or converted the garage to a bedroom, but did not get a building permit to do that, so it won’t show up as finished space on the records.

Now we come to comparables.   The most popular method for identifying the value of a home is to do a comparative market analysis.   I’ve seen some real disasters here, meaning that I’ve seen agents put together a comp report that is way off.   Be careful.   It’s easy to pull up so-called “comps” that are not really good and accurate comps at all.

The best comps are houses that are similar that have actually sold as opposed to listings that are active but have not yet sold.   And these sales are most accurate if they are recent, like within the past few months.   The older the sale, the further you get from the current market and current prices.   The comps should also be in the same or similar area.

Comps must be similar, which is often hard to find.   I’ve seen houses that are beautiful custom built homes that are worth $450,000 plus, and they are being compared to lesser homes that sold in the range of $275,000 to $325,000.   It takes experience to understand how to differentiate houses and compare apples with apples.

Then it is always good to take a look at active listings that are similar to see what the competition is.   These are just numbers to look at, and by no means are they definitive, because they have not yet sold.   Some will sell for much less than their current listing price.

No one can come up with an exact number for an ultimate price.   It doesn’t exist, but I do like to look at what I call a range of values, so all the data collected indicates that the fair market value of a home is within this range of values.   Then it is a matter of discussion to decide exactly where to nail the price down, and that   becomes the listing price.

One of the best guides to doing a good job with this kind of data collection and analysis is old fashioned experience.   If you need assistance with this process and you want to bounce ideas off me, just email me or call me.

Possibly Related Posts:

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Tagged under: appraised value, comparables, competitive market analysis, fair market value

About Chuck Marunde

After practicing real estate law for 20 years in Washington, Chuck opened iRealty Virtual Brokers covering the Sequim and the beautiful Olympic Peninsula. Chuck is the author of numerous magazine and Internet articles with a primary focus on real estate. He is also the author of over a dozen books, mostly about Sequim real estate. Chuck is a photographer, videographer, and Registered FAA Drone Pilot. Chuck has combined his love for real estate and technology to create a growing Internet presence in his market, and enjoys building his websites and blogs, including SequimBlog.com and Sequim4Sale.com and LuxuryWaterViewHomes.com. Chuck has degrees in Economics, Law, and Education.

2 Comments to “ How to Determine the Price of a Sequim Home for Sale”

  1. government grant says :Reply
    April 23, 2009 at 5:40 pm

    Well done, great post!

  2. e-fax says :Reply
    April 23, 2009 at 8:15 pm

    Nice one. A great read yet again.

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Chuck E. Marunde, J.D.

Sequim Buyer's Agent
(Atty Ret.)
Founder and Broker of
Sequim & Port Angeles Real Estate dba iRealty Virtual Brokers
125 Olympic Ranch Ln,
Sequim, WA 98382
(360) 775-5424
ChuckMarunde@gmail.com

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From Los Angeles

It's rare, but once in awhile life provides the perfect collaborator for an important endeavor such as buying your new home. For me that person was Chuck Marunde. His two decade background as a Real Estate Attorney, his prolific career as an author of articles and books on Real Estate and his forthright and moral character made choosing Chuck a no-brainer. Chuck is dedicated, thorough, incredible at the negotiating table, knowledgeable about all local laws & regs but, most importantly, Chuck loves what he does. And what he does is find his client the perfect property. Chuck isn't about making the sale, he's about making the sale that is OPTIMUM for his CLIENT and this makes Chuck a rare bird indeed. I love my new home in Sequim and I am indebted to Chuck for making it happen. Kevin E.

From Seattle

I’ve had the pleasure of working with Chuck over the past three years in selling my parent's estate. It was a tough time to sell during the housing recession, but Chuck always kept things on the positive side. With his real estate law background, he offers sound, practical advice. He helps you along with the process using discussions and reason, rather than opinions and speculations. If Chuck doesn’t know the answers, he will get them for you. In several instances, Chuck took the initiative to meet with county officials to get up-to-date facts about zoning and regulations. I was always impressed with his company’s tech savvy communi-cations and internet presence: weekly email updates, blogs, videos, links, Linked-in networking, etc. He is truly pioneering the future of buying & selling real estate. Brian M.

From California

"Andy Romano is a successful motion picture character actor with over 40 years in 'the Biz.' Mr. Romano has a home in beautiful Santa Barbara, California, but he chooses to live most of the time in Sequim, Washington on the Olympic Peninsula in the great Pacific Northwest. Why? In his own words, 'Because it's even more beautiful and surrounded by more beauty in this incredibly peaceful and quiet place. With respect to real estate agents or brokers, well my friend Chuck Marunde, owner of Sequim and Port Angeles Real Estate, is hands down the best there" Andy R.

Intro by Chuck Marunde

From Florida

We do our homework for the task at hand and we look for and expect to enlist partners that do the same. It was our good fortune to select Chuck Marunde of Sequim and Port Angeles Real Estate to represent us as a buyer's broker in our search for a home in the Sequim/Port Angeles area. Chuck's site is all encompassing and super fast compared to many others, he knows the market at every conceivable level and his guidance through the process of selecting and purchasing a home is priceless - above and beyond that of anyone with whom we have ever worked. Add to all this his 20 year background in real estate law and you have discovered a superb asset in the adventure of purchasing a home. Greg and Marilyn

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