One of the many benefits in hiring a real estate agent is that the agent has years of experience in establishing a sales price that will be competitive in your area. It is important to remember that a real estate agent is not an appraiser, so a real estate agent is only going to give you their educated guess at a home value. If you want an appraised value for your mortgage or other official purposes, you will need to hire an appraiser.
The first step a real estate agent takes is to research recent home sales in your area to find out what homes have really sold for. Before doing this, your agent will make a comprehensive list of the features and amenities on your home to try and match your home as closely as possible to recent sales. This is not an exact science, but it will help the agent to establish a basic range of values they can use to start narrowing down your actual home price.
Once your agent has a history of recent sales in your area, they will then look at current listings to see how the sales history compares to the homes currently on the market. The current sales prices are generally higher than historic prices because current prices have not been negotiated down to final sales yet. But some agents like to use current sales prices as the maximum area of their range to try and push your selling price as high as possible.
With a range of sales prices in mind, the real estate agent will then spend some time talking to the homeowner about any recent replacements, repairs, or upgrades to the home. This is where the homeowner is going to try to recoup some of the money they spent fixing up the home by raising the sales price. Some remodeling projects, such as updating a kitchen or bathroom, can add value to the home. A brand new roof and brand new siding can also help to boost the final sales price a little more.
The final step for a real estate agent determining the selling price for a home is to get online and check out what similar homes in similar parts of the country are selling for. Comparing your home to a home for sale halfway across the country does not sound helpful, but there could be features and amenities other agents are highlighting that are working in their areas. A good agent spends time utilizing as many resources as possible to create the highest selling price.
There are usually two types of appraisals attached to any home; a tax appraisal and a real value appraisal. In a perfect world, those two appraisals would be the same. But they are often different, and your real estate agent's selling price is going to be yet a third value number attached to your home. Your agent will be the one who going to have to constantly explain why their selling price is higher than the tax appraisal of the home, but that is why you hire an agent. A good agent will establish a selling price that will act as the foundation for the negotiations that will eventually result in a sale.