Sellers: Correctly pricing your house for sale
One of the keys to a successful home sale is pricing the house properly from the get-go. The following explains the process that real estate agents follow to decide what to sell your house for….
“RRRRRrrrrrr” as the brakes are applied to that type of reasoning.
The right listing price for your house is not something a real estate agent decides. It is something you, the seller, decide once provided with all the data that goes into making that decision. My role as a real estate professional is to provide the data and guidance needed to help you make a well-informed decision.
First, the listing price is based upon what is happening in the market at a given point in time. The people who really set the prices are the sellers and buyers. Whatever a buyer is willing to pay for your home is what it is worth. No more or less. Of course, it’s a little more complicated than that since knowing what buyers are spending on other homes is key to knowing what they might spend on yours. Here are some of the data points that are needed to make a pricing decision.
The data that is used to determine market value has to be recent; in our area, the best information to use is three months old at the most, although sometimes we might have to go out to six months if there are no appropriate comparables. But the market is changing all the time; it’s never a constant. So what your house is worth today could be different in a few weeks. Recent information is key.
In my analysis, I place the most attention on homes that recently sold. I will provide recent sales in your specific area which are similar in size/type to your home. Then we can compare those house features and condition to yours to help determine whether your home might sell for more or less. Part of this data gathering also includes what kind of sales they were. Foreclosures, short sales and estate sales can all depress price points. If your home does not fall into one of those buckets, we will need to ensure we compare it properly.
It’s also important to look at your competition. Buyers will be looking to get the best home for their money. If you are priced much higher than similar homes in the area, you may make the competition look more appealing to buyers. The key is to price competitively so buyers will flock to your home. So we will take a look at comparable homes currently for sale in the market.
I don’t usually put too much emphasis on analyzing expired listings. These are those homes that were on the market but failed to sell. A price that is too high is only one reason they didn’t sell, but there could be many other reasons. So while I will certainly provide you with information regarding homes that have expired, this shouldn’t weigh as heavily in your decision on a list price.
These are homes that have accepted offers, and contracts in place. While the actual sale price is not yet known, we can tell from the listing price what price points are attractive to buyers by seeing which homes do have contracts.
There are also some other data points that go into your final decision.
Is the market heading towards a buyers market or sellers market? If inventory is dropping, there may be some flexibility to price slightly higher than homes that recently sold. If there is a ton of available inventory, you may wish to price more competitively.
Your reasoning for selling should also go into the equation. If you are in a hurry and need to move quickly, pricing the home at the lower end of a listing price range may work for you. Conversely, if you have a little more time, you may wish to price on the higher end of the pricing scale. Your motivation might be important in deciding what to ask for your house.
Data not used:
Finally, what does not go into the price decision? What you originally paid for the house, or what you might owe on the mortgage, or what you might want to net, doesn’t factor into what makes an attractive price point. Those might, however, result in your deciding not to sell until a later date. Also, while recent renovations and upgrades might help you get more for your home that you would get without the updates, pricing to recoup your investments doesn’t work either. The important thing to keep in mind is the price points current buyers are paying for homes like yours.
After I provide all the information listed above, and after we discuss motivation and market, I like to ask you, the sellers, what you think a good asking price might be. I will certainly provide guidance if your answer seems out of line, but the data usually speaks for itself.
And once your house is on the market, the list price might have to be adjusted if buyers are not flocking to purchase it because the market truly is an ever changing place. Looking at sold homes and available inventory should be an ongoing process, not something that just happens before listing your home.
I hope that information helped explain how list prices are developed. If you want to sell your home in Monroe, NY or the Orange County NY area, I’d be happy to assist you with this process. Just give me a call on 914-419-0270 or email me at firstname.lastname@example.org to get started!
Originally published in ActiveRain.