One of the most difficult parts of putting your home up for sale is determining the listing price. Price it too high and it won’t sell, price it too low and maybe you are leaving money on the table. If you are like most homeowners, you are somewhat emotionally attached to your home. You loved it enough to buy it right? You have family memories there, you have it decorated just the way you want it and you know it’s the best house on the block! Do you really think you can be objective when it comes to setting a sale price?
The answer, if you are being honest, is probably not. One of the things a professional Realtor does is help the homeowner arrive at a listing price. This is a delicate combination of part math, part skill, part experience and part timing. The Realtor has no emotional attachment to the property and can be completely objective. They will look at the “comps” or comparable sales and listings to help establish a price range. This process is called a Comparative Market Analysis or CMA. It is not an appraisal, which can only be done by a licensed appraiser, but a study of market activity of similar properties. After looking at what comparable properties have recently sold for, your Realtor will look at the active listing competition you will be facing. These two studies will help establish a range of value for your home. That range will then be adjusted up or down for condition and amenity differences between your home and the comparable properties. If your home has a finished lower level or a 3 car garage or a newly remodeled kitchen with high end finishes and the comps do not, that
indicates the value of your property should be at the higher end of the range. If your property is lacking some of the features of the comparables, then your property is probably towards the lower end of the range.
There are other factors to consider when pricing a home too. The current inventory of similar homes can also be a factor. If you have a 2 story home worth around $50,000 and there are currently 40 on the market, the amount of competition you will face can very well push the price of your home down. On the other hand, if you are selling a 4 bedroom ranch home and there are no other 4 bedroom ranches on the market, you may be able to price yours at the top of the range since you have no competition. The time of year that you are putting your home on the market may have an impact on the list price. Typically, May to September is the prime selling time in our area. Most buyers tend to buy during this period and since there are more buyers, the market is more active and you may be able to price your home to reflect that. In the winter months, the market is typically not as active and prices usually tend to be at the lower end of the range to try to attract a buyer. Circumstances can also affect the list price of a home. If you are in a situation where you need a quick sale because you have to re locate for a job, you will need to price your home aggressively so it doesn’t linger on the market.
These items all play a part in establishing a reasonable list price for your home. Here are some things that should not be factors in establishing a list price. The balance on your mortgage has nothing to do with the market value of your home. No one cares how much you still owe on your house except the bank. Unfortunately in our current market the balance on your mortgage may be more than the house is actually worth. The amount of money you need to buy your next house also has nothing to do with the value of your current house. If
you owe $90,000 on your current mortgage and you need to put $10,000 down on your new house, you can’t add those numbers together to come up with a list price for your current house. Your house may only have a market value of 90,000 and the fact that you need a $10,000 down payment to buy your new house does not increase the value of your current house by $10,000. Buyers don’t care what you need to get out of your house to buy another one. They won’t pay $10,000 more than it’s worth just because you need it. Homeowners also make a mistake when they try to add up the cost of all the improvements they have made to the home and add them to the market value to come up with a price. Putting a new roof on a house does not increase the value of the house by the price of the roof. Replacing a roof, furnace, air conditioner, water heater-these are all considered maintenance items. Things wear out and need to be replaced. A house with a new roof may be more appealing to buyers but they are not willing to pay the cost of the roof plus the market value of the home. Keep this in mind when making home improvements. Some things add value to your home and some things are just maintenance. A new kitchen can add value and may increase the list price of your home by several thousand dollars but if you spend $25,000 remodeling your kitchen you will probably not get every dollar of that back when you go to sell.
Pricing your home correctly is part science part skill and experience and Realtors have the experience and skill to help you price your home properly. They are not emotionally invested in your home like you are and can price your home based on facts, not feelings. A correctly priced home sells quicker and for more money than an overpriced home that languishes on the market with price reduction after price reduction and ends up selling for less in the end that it would have if priced correctly from the beginning. The temptation to
just “try it at a higher price” should be avoided. You will lose the momentum you have as a new listing by being overpriced and will most likely not attract any offers. Buyers are very educated about market value these days and won’t waste their time looking at overpriced homes when there are so many correctly priced homes to choose from. Resist the temptation to overprice your home and take the recommendation of your professional Realtor who knows the market. Remember –price it right, it sells overnight. Price it wrong, it stays on too long! For more information about selling your home go to my website at www.choicerealtyfreeport.com.