Home Sellers Guide—What is the correct price for your home?
Price is one of the three elements that will determine whether you will be successful in selling your home. The other two elements are location and condition.
I believe that price is the most important of these elements. Your asking price must take into account the location of your property and its condition. Once you have established a price range for properties similar to yours, location and condition will determine whether your home will command the top of its price range or the bottom.
Read more about how location and condition issues can affect your property sale. What are the most important factors in selling?
How does your real estate agent determine a price range for your property? The agent should look at recently sold properties, properties under contract but not yet sold, and active listings. Each of these comparables or comps should be similar to your property.
How are comparables chosen? Ideally, the comps should be from your neighborhood. If none are available in your neighborhood, they should be from nearby similar neighborhoods. The home type, size, features and age should be similar. The lot size should be similar as well, although variations in size within a given neighborhood usually don’t have an impact on price.
How are sold comparables evaluated? The sold comparables for your property should be limited to those that closed within the last six months. This will ensure that the closed prices are still valid in the face of either an appreciating or a declining market. Once the comps are chosen, the real estate agent may have to make adjustments to them in order to make them similar to your property. Examples of these adjustments would be adjusting for the larger or smaller size of the comp, adding or subtracting a garage, or subtracting the amount of closing costs that the seller paid for the buyer. The adjusted values of the comparables will identify the price range of your property.
Why look at properties that are currently under contract but not yet closed? These properties represent the current market. While the final closing price is not available, a look at the asking price and how long the properties were on the market before getting a contract will indicate whether the market is improving or declining.
How do active listings affect your price? After you’ve determined an appropriate price range, you should look at a list of comparable listings that are currently active. Place your property on the list to see where you will fit in. Are you the most expensive home on the list? If so, buyers may overlook you as not being a good value. Remember that potential buyers will be looking at your competition too, both online and then in person. If your home appears to be out of synch with your competition they may eliminate you from their list. Looking at your competition and evaluating where you stand relative to the competition is one of the most important things you can do to identify the correct price for your home.
How do you choose the correct asking price? Every home buyer wants to negotiate the price so you will need to choose an asking price that accommodates some negotiation. Generally your asking price should not be more than 3% to 5% above the price that you think you can get for your property. If your asking price is higher than that, buyers may simply pass you by. A high asking price will not generate a sales price above what the market dictates is the correct price. If you’ve been on the market for awhile without showings or with showings but no offers, your asking price is probably too high.
Considering a sale of your current home? Request a free comparative market analysis and evaluation.
Copyright 2012. Carol Fox. Allen Tate Realtors. *Home Sellers Guide—What is the correct price for your home?*
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