Many sellers rely on online estimates like Zillow’s Zestimate or other online pricing valuations, but these can be misleading or just plain inaccurate. So how do you  accurately determine your home’s value and what tools can you use to understand the local real estate market? I’m going to go through the metrics that I utilize–you can use them as well so that you can make informed decisions.

Online Algorithms: Why Zestimates Aren’t Enough

Before we dive into the metrics, let’s talk about online estimates like Zillow’s Zestimate. While these algorithms provide a quick estimate, they’re not reliable enough to base your listing price on. The fine print often shows a +/- range that people overlook. These tools use basic details like size, number of bedrooms, and bathrooms but don’t account for updates, functional layouts, or neighborhood nuances. When I sit down with a seller, the first thing I go over is the various online algorithms—I’ll show them their Zestimate, Redfin value, and a few others like First American, Black Knight, and Remine. And then I explain that I’m going to look at a wide range of metrics to craft a detailed analysis. You have access to some of the tools that I use so you can do it too—let me show you how.

Metric 1: Median Sale Price

First, I look at the median sale price. I start with a broader area and then narrow down to your specific local market. This involves looking at statewide, regional, and local data. The median sale price tells us the middle value of all homes sold in the area, which is more reliable than the average sale price that can be skewed by extreme highs or lows.

For example, if the median sale price in your neighborhood is $500,000, half of the homes sold for more and half for less. This helps us gauge the typical home value in your area. Is your local market higher or lower than the regional or statewide data? This helps us see if prices are increasing or decreasing.

You can find this data on sites like Zillow, Realtor.com, or through local MLS reports.

Metric 2: Price Per Square Foot

Price per square foot helps us compare home values regardless of size. If homes in your area average $200 per square foot, a 2,000 square foot home might be priced around $400,000. This metric provides a baseline for understanding relative value, not considering updates, functional layout, condition, etc.

You can find this information on real estate websites or ask your agent for a detailed analysis.

Metric 3: Days on Market (DOM)

Days on Market, or DOM, indicates how long homes typically stay listed before they sell. A lower DOM suggests a hot market with high demand, while a higher DOM might indicate a slower market. If homes in your area have an average DOM of 30 days or less, we need to price and market your home to sell within that timeframe.

Websites like Redfin and your local MLS can provide this information.

Metric 4: Inventory Levels

Inventory levels show how many homes are currently for sale. Low inventory means fewer options for buyers and potentially higher prices. High inventory can mean more competition for sellers. Six months of inventory is a balanced market; less than six months is a seller’s market.

Understanding this metric helps us strategize—if inventory is low, we might have more leverage to set a higher price. You can check this on real estate sites or through your local MLS.

Metric 5: Sale-to-List Price Ratio

The sale-to-list price ratio is the percentage of the listing price that homes actually sell for. If the ratio is 98%, homes are selling for 98% of their asking price. This metric helps us understand how competitive the market is. In a strong seller’s market, homes might sell at or above asking prices.

You can find this data on real estate websites and through local MLS reports.

Metric 6: Current Competition

I review what’s currently active, under contract, and pending in your area. I reach out to those real estate agents to gather information about the number of offers they received, where they’ve landed, and when they expect to close. It’s important to look at your property and the competition with a discerning eye, understanding that differences in features can affect listing prices.

Metric 7: Neighborhood Comparables (Comps)

I check out comparable properties that have sold—these are recent sales of similar homes in your neighborhood, no older than 6 months but preferably 3 months or sooner. These properties provide a benchmark for pricing your home.

You can find this data on real estate websites, but I also look up tax records to see if there have been off-market properties that have sold.

Bonus Metric: Interest Rates & Other Impactful Trends

Interest rates affect buyer affordability. Lower rates can increase demand, while higher rates might reduce buyer interest. Keeping an eye on current mortgage rates helps us understand how they might impact your sale.

Other factors like serious crime, zoning changes, school rating changes, and infrastructure developments can also impact home values.

Understanding all these metrics helps you create a plan and make informed, strategic decisions. If you’d like my complete plan—The 7 Pillars of Successful Home Selling—click on the link below. If you’d like me to connect you to a local professional in your community, no matter where you are located, I can help. If you’re in RI, MA, or CT, I can assist directly, but I have access to top agents in every market through eXp and can connect you to the best professionals to suit your needs.