Probably the single biggest factor that will determine the success or failure of the sale of your home will be the sale price. Price it fairly, and you will not only sell it quickly, but likely also at the best possible price. But price it too high, and the property will simply sit on the market, and you’ll be forced to accept a lower offer down the road.
No matter how sure you are of how much your house is worth, there are a few steps you need to go through in order to determine exactly what the right price is.
Tapping the Usual Sources as a Base
Because of the Internet, you can often get a rough idea as to the value of your property by using sites such as Zillow.com, Trulia.com, and Realtor.com. But while those sites can be useful starting points, you may need to go step or two farther in order to get a more precise number. Bottom line, you want to know how to price your home to sell for top dollar.
One of the best ways to get a solid value is by bringing in a real estate agent to do a comparative market analysis, or CMA. The agent will determine the value of your property based on closed sales in your immediate market area. Typically you will not need to pay for this, since the agent will do it in anticipation of getting the listing on your home should you decide to go there later on.
If you want an absolutely precise number, you can pay an appraiser to do a formal appraisal on the property. This will cost you a few hundred dollars, but it will give you the greatest level of certainty as to the real value of the property.
Sources You Shouldn’t Consider
Let’s take a minute to discuss some of the sources that people often use to determine the value of their homes, but shouldn’t. These can include:
- The sale price of a single home that sold in your neighborhood
- The asking prices of homes selling in your neighborhood
- The advice of a well-meaning friend or relative
- Your “gut feeling” as to the value of your home
Though these sources can be emotionally satisfying, none are supported by objective facts. For example the sale price of a single home sold in your neighborhood could be that of a superior property. And asking prices of homes in your neighborhood are not an indication of what those properties actually will sell for – they’re just asking prices.
Given that pricing your home is so important, you need to get the most objective information possible.
Adjusting for the Realities of Your Market
Unless you are paying to have a formal appraisal done on your property, you should take any starting values that you arrive at from the Internet, or even from a CMA, and adjust those for the realities of your market.
If your market is particularly strong – and you’ll know that by the fact that houses sell quickly after being listed – you’ll have more flexibility with your pricing. But if you’re in a buyers market, where there are more properties for sale than there are buyers to buy them, then you will need to lower your price sufficiently to get noticed by the few buyers that are out there.
Adjusting for the Realities of Your Property
Condition of your property is another significant factor. It can be very difficult to do this in an objective way. For example, you may consider your property to be in average condition, when it fact it is in below average condition. And if it is, you’ll have to shave a few thousand dollars off the asking price.
On a structural level, if your home has only one bathroom, but most homes in your neighborhood have two, you’ll need to lower your price in order to make up for that very important missing amenity.
In the other direction, if your home has great curb appeal and you have completely renovated your home within the past two years – and most of your neighbors haven’t – you can afford to price your home a bit higher than other properties.
How Fast Do You Want to Sell?
This is a critical question very early in the sales process. If you want to sell your home fast, you’ll need to price the property at least a little bit below the prevailing rate. This will grab the attention of prospective buyers, who will likely prefer to see your home rather than other comparable properties with higher asking prices.
But you also have to be careful that you don’t cut the price too much. If you are well below the market value in your area, buyers may suspect that the property has a major deficiency. You want to price your property to be the better bargain, without sending out distress signals at the same time.
You’ll Have More Flexibility If You Don’t Use a Realtor
Of course, you’ll have more price flexibility if you are not using a real estate agent. Paying a 6% real estate commission to an agency will reduce your price flexibility. You’ll be forced to price your home at or even slightly above the prevailing market, in order to compensate for the commission.
The only way to get around this is by selling your home yourself (FSBO). And while that can be a complicated process, it’s not difficult if you know what to do. My Selling Your Home Made Simple program will show you exactly what you need to do. You will be able to sell your home using many of the same techniques that real estate agents use, but you will not need to pay the 6% real estate commission in the process.
Not having to pay a real estate commission will make it much easier for you to price your home for a quick sale, which is yet another reason why you need to consider selling your home without using an agent.
( Photo by Diana Parkhouse )