Setting the Price on Your Home
Along with location and condition, the pricing of a house is a major component of the reasons why a house will–or will not–sell quickly. Although the pricing should not be dealt with lightly, some sellers have a tendency to put too much emphasis on the price and not enough on the condition, ending up with a house that is overpriced for its current condition and the overall market. Even if you find an unaware buyer that appears willing to pay the high price, when the buyer applies for a mortgage, the chances are good that the lender’s appraisal will force the price back down to market value.
It’s important to get it right the first time
Care and time should be taken when establishing the original listing price for several reasons:
1) If the house is overpriced, it won’t sell. If it doesn’t sell and sits on the market the listing quickly becomes stale.
2) If you overprice the house with the intention of reducing the price later just to “see what the market will bear”, when the price of the house is lowered, it signals to buyers that it was (and still may be) overpriced.
3) If the house is underpriced, it most likely will sell quickly–to the detriment of your net proceeds.
Some factors that affect the price of a home
1) Location: You can’t get away from this one. If your house is located in a desirable area that is in demand, you will be able to get a higher price than you can for the same house in a less desirable area.
2) Condition: A house that has been better maintained and shows better will always sell for more than one that has had deferred (neglected) maintenance and needs work.
3) Desirable amenities: If a house has amenities that are currently popular in the marketplace, it will bring a higher price.
Methods of setting the price
CMA (Comparable Market Analysis): A comparison of similar properties in the same general area that compares actual sold prices. A Real Estate Agent can generate a CMA, or in many cases you can do it on your own.
If you’re thinking about selling your home in the next 12 months, this FREE service is designed to help you get an estimate of your home’s value. Knowing how much your home can be worth is one of the first steps in beginning to market the property.
HomeSmartReports How much is your home worth (in most regions of the United States)? Using mathematical and statistical models, neighborhood sales activity is analyzed and compared to your home to reach a value estimate in less than one minute. Cost: $24.95
Traditional Appraisal: A estimated valuation is placed specifically on your house by a professional appraiser. An appraisal will take into account location, condition and sale prices of comparable properties in the neighborhood.