Seller's ask "How do I properly price my home?" -Bronx, NY (Look at the Comps!)
At work I talk to buyers and sellers all day long. And while most buyers and sellers want what they want when it comes to pricing a property, they usually follow my advice when I tell them what they can sell their house for or what they can afford to buy, (but not always!)
Properly pricing goes a long way in selling your house. If the home is over priced, it can remain stale on the market and then it can take months and months to sell.
Now there are many things that go into pricing a home, but for me to write down everything, would take up the rest of the day! Let's just stick to Comparables for now.
Comparables also known as comps, are homes that have sold in the area. A good realtor should do research and find what similar homes have been selling for within the last six months. Six months is key because appraisers are only going back six months for their appraisals. Which mean, that if you want $430,000 for your single family in Throgs Neck, and you cannot find a sale that took place within the last six months that sold for at least $430,000, you will not be able to get an appraiser to appraise it for that value. Which means a bank will not lend on more than the appraised value. (Unless there are extrodinary factors like, a triple lot, or double the square footage of any other home as a comp.)
More often than not, appraisers are just going to pick three similar homes in the area and appraise yours somewhere in between those three values. Yes, they will take into account the condition of your home, but in today's market they are not going to appraise they home for more than they highest comp.
Because banks are not letting them. Banks have taken such big losses from the recent decline in the market, and so many home owners not paying their mortgage, they have notified their appraisers that they cannot value the home higher than the highest comp. Which makes sense in a declining market. The logic is correct, however selling homes is not a science, its more of an art. :)
Realtors have access to local sales information, but again looking at the "comps" is not the only way to price a home. If you want to search for your own comps, PropertyShark.com, is a great website. You should still however consult with a professional before putting your property out there in the market.
Now comparables, are not the be all and end all of pricing. There have been situations where the comps just do not ad up. Either too high or too low. Having that knowledge of speaking to buyers and sellers all day long, helps me have an additional extra sense, in knowing what a home can sell for, and although no one is perfect, it helps to talk to someone with experience in pricing homes.