We all know real estate values have been on the rise…especially in Detroit. As a Realtor, the question I often get asked is “How do I calculate the value of my Detroit home?” To help shed some light on this subject I thought I would share Realty in the D’s simple method of calculating the value of your Detroit home. It goes as follows:
- Determine the average price per square foot comparable properties in your area have been selling for over the past 6 months. Depending on your location, you may even want to narrow it down to just your neighborhood.
- Determine what the finished square footage of your home is. Note…if you have a finished walk out basement, you can include up to 80% of that square footage in your calculation depending on the quality of the finished basement.
- Multiply the square footage of your home by the average price per square foot that comparable homes have been selling for in your area.
- Now you need to take that price and adjust it for the current condition of your home. For example, if your house is in need of significant renovation work (i.e. New HVAC, new Roof, the kitchen needs to be updated, bathrooms, etc.), you would discount the value you established in step 3 above and reduce your price by up to 50%. On the reverse side, if you have just finished a significant remodel of your home, you can increase that price by up to 50%.
Here is an example:
- Average price per square foot of comparable properties sold over the past 12 months = $90/SF.
- Your house’s finished square footage = 3,500 SF.
- You just finished a installing a new roof and completing a significant kitchen and bathroom remodel – You would increase your price by 25% over the average.
- Calculation – Multiply 90 by 3,500 = $315,000. Then take the $315,000 and multiply that by 1.25 to account for your recent renovation work. This gives a value of $393,750.
The next step is to put it on the market and see how the market reacts. If you’ve priced it right, you will find it sells within 30 days!
If you need some help with establishing the true value of your property or need help selling it, let us know. We’d enjoy the opportunity to help!