Pricing Your Home; A Strategy For Success

The single most important decision you will make concerning the sale of your home is establishing the asking price. Set the price too high and your home will languish on the market with little to no attention from buyers; price it below market value and you will leave equity on the table at closing. Some have referred to pricing homes as equal parts science and art. I tend to disagree. Unless your home is extraordinarily unique there's very little art to it whatsoever.

Establishing market value is achieved by comparing homes of similar design, location, amenities, age, size and condition to the subject property. Adjustments are then made so the comparable properties more closely resemble the subject property. Once the adjustments are complete, an initial range of value will present itself.

For accuracy, sold comparables are typically limited to the preceding six months. In a changing market, a second analysis should be completed using sales that are no more than two to three months old. In a downward changing market that window could easily be even less. To complete the range of value, active and pending sales are researched and adjustments made to solidify market value. Active comparables, however, represent the very upper end of value but should somewhat support the ‘sold' comparable analysis.

It's important to note that the market is completely self-centered. That is to say the market doesn't care if you need to net a certain amount at closing in order to pay off credit cards, a second mortgage or for a family vacation. Buyers will not pay more for your home than similar homes on the market. Serious buyers who are actively looking at properties will know if your home is priced above the competition. In most cases that means they would not bother with making an offer. REALTORS® know the market even better and will often disregard an overpriced property until the owner brings the asking price in line with its true market value.