Setting the Price on Your Home
There are three elements that control how quickly a house will sell:
Although pricing should not be dealt with lightly, some sellers have a tendency to put too much emphasis on the price and not enough on the condition, ending up with a house that is overpriced for its current condition and the overall market. Even if you find an unaware buyer that appears willing to pay the high price, when the buyer applies for a mortgage, the chances are good that the lender's appraisal will force the price back down to market value.
Do it right first time!
Care should be taken when establishing the original listing price for several reasons:
Some factors that affect the price of a home
If the house is overpriced, it won't sell. If it doesn't sell and sits on the market the listing quickly becomes stale.
- If you overprice the house with the intention of reducing the price later just to "see what the market will bear", when the price of the house is lowered, it signals to buyers that it was, and may still be, overpriced.
If the house is under priced, it most likely will sell quickly and you will be leaving money on the table.
- Location: This one is a given. If your house is located in a desirable area that is in demand, you will be able to get a higher price than you can for the same house in a less desirable area.
Condition: A house that has been better maintained and shows better will always sell for more than one that has had deferred (neglected) maintenance and needs work.
Desirable amenities: If a house has amenities like finished basement, quality kitchen and bathroom etc. that are currently popular in the marketplace it will bring a higher price.
Methods of setting the price
Tips on Selling Your House on Your Own
Setting a price for your house is not an exact science. No matter what you do, or the method you use, it will eventually come down to what a person will pay for your house given the location, condition and amenities.
Start by doing a CMA (Comparable Market Analysis), which is a comparison of similar properties in the same general area that compares actual sold prices. A Real Estate Agent can generate a CMA, or in many cases you can do it on your own. Make sure you get as close to apples to apples as you can with same size, type of house, number of rooms, landscaping etc.
A second method is the Traditional Appraisal. This is an estimated valuation placed specifically on your house by a professional appraiser. An appraisal will take into account location, condition and sale prices of comparable properties in the neighborhood.
There are also a number of on-line appraisal services available.
- Don't scrimp on your house preparation. Remember, you will be in competition with house listed by Agents who will coach their sellers on all aspects of preparing their homes.
- Be aware of all legal requirements for disclosures in your area. Not disclosing necessary information or not using the correct form could leave you open to legal action from a buyer.
- Become an expert in advertising and marketing. Make your house stand out!
- Familiarize yourself with offers and contracts now--don't wait until you have one in your hand.
- Get maximum exposure. ForSaleByOwner.com offers a complete menu of services if you want to sell your home on your own. Packages available range from a comprehensive marketing plan up to a complete deluxe package that will market your property until it is sold and keep your home on the MLS and Realtor.com for 6 months.
- Be aware of equal housing laws. Not only is discrimination stupid (you limit your potential market), it's illegal!
- If selling your house on your own appears to be your best option, Selling on Your Own will be of great value to you. If you feel that using an Agent may be the way to go, see the section Selling with a Real Estate Professional.