That ranch down the street sold for $185,000. But c'mon, it's nowhere near as nice as your 2-story, right? You could get at least $15,000 more since you remodeled that kitchen a few years ago. Plus you need to get $200,000 in order to afford the down payment on that Victorian you always wanted. And while you're at it, you better pad that price another five grand to cover the buyer's eventual offer...so go ahead....list it at $205,000.
Now days, too many home sellers follow this concept when setting the selling price on their home, and they all suffer the same consequence. An overpriced listing that rides the market wave only to eventually sell for less than it would have in the first place if it was priced accordingly.
Simply put, the list price is the most important component of any marketing plan....period. Granted, all the ads, open houses, signs, etc contribute to the sale but all of the marketing dollars that I put out there will be dead ends on an overpriced listing. However, setting the list price is not as simple as it may sound. A variety of factors come into play in determining a figure that sells a property without leaving "money on the table". Property size, home size, condition, neighborhood characteristics, and market conditions are just a few of factors that I take into account when helping sellers set their list price. These factors must remain objective and divorced from their own personal economic goals.
Most of the sellers I meet are unrealistic about the price of their home and usually need a quick dose of reality, which comes from research on other homes right in the immediate area. The first things we look at are the comparable sales (comps). These are recent sales of similar homes in the same neighborhood. Typically, I like to go no further than six months back if at all possible. The market now is not what it was a year ago, nor will it be the same a year from now. I can not stress enough that sellers need to focus on SOLD comps and not comps that are currently listed. Just because George down the street has his 2 bedroom townhouse on the market for 3 million doesn't make your ranch 3.5 million. The perfect comp is a home of the exact same size and style, on the same size property, a half a block down the street that has sold within the last 30 days. Because each and every home has its own unique features, the perfect comp is pretty hard to come by.
This is just the starting point. Interior features of your comps are pretty valuable as well. Realtors like me are continually in and out of homes on the immediate area. Just because you have 500 more square feet that one of your comps, doesn't necessarily mean your house has more value than their 360-degree panoramic rooftop sun-room.
With the current market conditions in Northern Illinois, setting the right price is more important than ever. When coming into the housing market, keep an open mind and listen to what your Realtor has to say. We are professionals in our field and offer free professional advice but it's worthless if you don't take it.
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