How to Price Your Home to Get Its Full Value and Equity
Real Estate Market Statistics can price your home. So from the first installment, - 5 Real Estate Market Statistics You Need to Know we realize that we need to know
How many new homes--How many expired listings--How many actives--How many sold--How many pending
And that each of these has an average price. In a real estate market that is on a downturn, every seller needs to ask-- How many months of inventory is there on the market? If the number is high, then the competition is high. If the number is low, the competition is reduced.
This is how you figure out the months of inventory by dividing the number of active listings by the total number of pending and closed listings in a given amount of time
If the formula were a word problem, it would read like this. Hypothetically, last month 10 houses sold in Richmond CA and 20 went into contract, if there are a total of 300 houses on the market, at that rate, how long would it take to sell them all?
You divide 300 by 30 to come up with 10 months of inventory.
Don't subtract the sold and the pending from the 300 because we are not solving for inventory but for the amount of time to deplete that inventory.
Okay if there are 10 months of inventory of homes about in the same condition, near your location and with similar characteristics as your home, how would you price it? Remember, in the preceding example, only 1 out of 10 houses are selling. Wouldn't you want it to be yours?
Remember the rule:
- In a down market price your home a bit lower than the trend. That way, comparison shopper will know that your house is a good value. When you look like a steal, you are more likely to garnish more interest. And-if you are lucky-competition.
Many sellers are concerned about the full value and equity for their property. Of course, everyone wants to protect her investment, but overpricing is not protecting an investment. Overpricing is over exposing the property and denigrating its value. When a property sits too long, potential buyers believe that the property has problems and the majority will pass it by. After awhile, the only offers made on a property will be by investors trying to profit on a seller's desperation.
Keep that in mind and calculate the price you have to list it at to get it sold, and if you can't agree to that price, then ask yourself:
- Do I have to sell now or can I wait it out
- Can I refinance
- Can I rent it out
- Can I ask my bank to rework my loan to give me some relief