How to Price a Condo? Investor's Value Formula
In a low inventory real estate market, it can be tricky to price a condo correctly.
Price it too high and you will miss the frenzy of the first week it's on market. Price too low and you'll be leaving money on the table. See my article from last summer about the Dangers of Under Pricing, when many agents underestimated the market.
So how to price a condo in such a market?
One method to price a condo I use is the Investor's Value formula. For this you nee to know:
- Taxes
- Condo Fees
- Rent Value of Condo in Question
- Return investors expect on this type of property
Example:
Because rents are on the rise in Boston, investors are buying condos in Brookline and Brighton with a return of 5%.
One bedroom condo with rent value of $1850
Expenses = Condo fee: $350 + Taxes: $200 = $550
Net income = $1350
Investor's Value = $1350 / 5% = $270,000
This is not the only way I arrive at a price, but this formula makes me wiser about the price and my ability to sell the condo to an investor.
What to learn how to price your condo? Click on the link for a free home evaluation in Brookline, Boston and Newton.
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