What's My Home Worth?
Determining the sales price of a home depends on many factors. The best market analysis tool is a comparison to similar homes that sold recently. But of course, no two homes are exactly alike!
Collecting recent market data and considering other variables assures the best method for calculating your home’s value. Supply and demand of similar properties, timing (peak or off-season), and your home’s unique qualities all affect desirability, and can attract or deter potential buyers. Determining the right price for your house can take on one of three strategies:
Pricing a home under market value is often used to incite a “bidding war”. The agent can look like a real hero for attracting an abundance of offers. But oftentimes, many offers don’t pan out and a property ends up going thru several escrows before one “sticks”. Buyer’s don’t like being forced into a bidding war, and the process is extremely time consuming for agents and seller’s alike.
Many agents will stroke a seller’s ego by suggesting a sales price that is actually too high. They often “win” the listing when competing with other agents, but actually lose the deal, because the listing just sits and sits. Putting a house up for sale at too high of a price can be a real “Buzz Kill”! Agent and Seller end up chasing the market downhill, with lots of wasted time and energy.
Most sellers want to obtain the highest price a buyer is willing to pay at a given time. Determining a pricing strategy takes into account current market conditions in real estate and mortgages, competition, desired timeframes, and neighborhood variances to name a few. While not an exact science, determining sales price with your agent is an important discussion.
If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse. In general, to qualify you must have owned and used your home as your main residence for a period of at least two years out of the five years prior to its date of sale. Refer to IRS Publication 523 for the complete eligibility requirements and limitations.
Over 55 Years of Age
Did you know that if you are age 55 and over in California, you may be able to transfer your existing primary residence’s low property tax base value to a new home that you are buying?
You, or a spouse residing with you, must have been at least 55 years of age when the original property was sold. The replacement property must be your principal residence and be of equal or lesser “current market value” than the original property; purchased or built within two years (before or after) of the sale of the original property. Consult California Prop 60 and Prop 90 for details.