Houses sold in the past year, Walnut Grove Subdivision:

Houses on market now, Walnut Grove Subdivision: None!

Analysis

To determine a market price—list price and/or potential sale price—we need to look at what houses nearby have sold for in the past year, and preferably in the past six months, as this is what an appraiser for the buyer’s lender will do. We need to find “comparables”, that is houses most similar to yours. We can look at average sale price for the neighborhood, which is a factor, but to more specifically determine a price for your home, we normally look at price per square foot, which allows us to compare homes of different sizes with the same yardstick.

One thing which I discovered when I checked the county records is that according to the county, your home has 1330 (heated) square feet rather than the 1420 square feet you indicated in your email. For all of the following analysis, I used the lower figure of 1330 square feet, since any potential buyer’s agent will probably check the county records. The numbers would be different (somewhat higher) if your home actually has 1440 square feet. The only way to know for sure is to have it measured by a professional, so it can be priced correctly.

The highest price that a house in your subdivision sold for was $75.78 per square foot last July (3346 Buckeye). Using this as a guide, a buyer, represented by a buyer agent would probably not pay more than $100,000 for your home. However, that house was much smaller than yours, and an appraiser would probably not consider it a comparable. In addition, that house was characterized as being in “excellent” condition. The house most similar to yours in size (1674 N. Salem) sold for only $69.53 per square foot. At this price, the probable sale price would be about $92,500. This house did not have a condition noted, but the remarks indicated that the seller would be painting the house and replacing the carpet prior to closing. This is a typical pattern if you look at the general price level of the houses sold in your neighborhood. If the average price is, for example, $90,000 and your house is smaller, it will sell for less in global terms, but still at a higher price per square foot. However, if you have the “biggest house on the block,” the general price level of the neighborhood’s sales will make your house worth less per square foot.

Another factor to take into consideration is how quickly you would like your home to sell. If you price it at the market price or only slightly above, it will probably sell more quickly. You do not have to lower your price in a negotiation with a buyer if it is priced appropriately to begin with. Most recent sales of new and newer homes have been at the list price or close to it. In a few cases where the sale price is higher than the list price, it usually means that the buyer asked the seller to pay part of his closing costs. If your price is too high to begin with, the house may sit on the market for awhile, and even if you reduce the price later, the initial flurry of people looking at your home because it is new on the market will already have passed.

A further consideration is to look at other houses currently on the market in the same price range. At present there are no houses for sale in that neighborhood or in the neighboring Woodfield Subdivision. In the next subdivision further out from I 540 (Willow Springs) there is nothing for sale either. One home is pending. It was a brick home with 1495 square feet, listed at $99,900 ($66 per square foot), and was characterized in the MLS as “sold before print” which means that someone made an offer before it got into the MLS. At present, there is an extreme shortage of homes for sale under $100,000 so when good listings come on the market they generally sell quickly (principle of supply and demand). The days on market figures above indicate the time between when the house was listed and when it went under contract. What this tells us is that if we price your home appropriately, it should sell quickly.

In addition, homes on the west side of Fayetteville have appreciated rapidly in the past couple of years, primarily because of the shortage of homes on the market. Now most homes on the market there of the approximate size of yours, sell for between $89,000 and $100,000 depending on condition. There is no new construction in this price range in Fayetteville or Farmington, so that buyers who want to purchase a newer home must purchase a re-sale home. Much depends on the condition of the inside of your house. If it is in excellent, “like new” condition, it could be priced closer to $100,000, but if it needs work, to sell it quickly, it should probably be priced closer to $90,000.

Determination of the Value of Your Home

The way we realtors try to determine a valid list price of a home is to take the average of three methods of determining its value:

1. Market value—The value of your home according to this measure is what I was discussing above. To figure it using $70 per square foot (the sale price of the house most comparable to yours which sold in the last year), the value of your home using this measure would be $92,475.

2. Appreciated value—The value of your home according to this measure uses what you paid for your home and takes into account the natural appreciation which occurs. The rule of thumb that we use is 3% per year, although in the past year prices appear to have appreciated more. Thus according to this measure, using figures from the county records, you paid $69,000 for your home in the year 1994. Thus, using an appreciation of 3% per year for each year since then, and 4% for the last year, the current appreciated value of your home would be $90,904.

3. Cost to rebuild—Estimating the cost to rebuild must take into account what it would cost today to build your home. Not having seen your home, this is somewhat difficult, as it depends on what’s in it. Drawing on my knowledge of homes in that neighborhood, actual construction costs now would be between $50 to $55 per square foot, and the value would be between $66,500 and $79,800, plus the value of the land. According to the county records the builder purchased your lot for $12,000. Today a similar lot would cost a builder between $15,000 and $20,000. A ballpark estimated actual construction value using $52.50 per square foot and land value of $17,500 would be about $87,325.

Average of these three values: $90,234.

I hesitate to give you an exact list price without having seen your home. What I have tried to do here is examine the current market and other factors which will influence any potential listing price. Much depends on the condition, as well as the actual amenities in the home. Keep in mind that a lower list price will probably sell the home faster if that’s what you want and need. If the house is in good to excellent condition, it could probably be listed as high as $95,000 and still sell relatively quickly.