How to Price Your Home
The most important factor when selling a home is pricing the home. An overpriced home won’t get attention and will lose its freshness in the first two or three weeks. After twenty-one days on the market, interest in a home wanes. Pricing a home too low shouldn’t be too much of a worry. Typically, lower-priced homes will receive multiple offers, which will drive the price up to market price. To properly price your home, here are five factors you should consider.
To start, list every similar home that was or is listed in your neighborhood over the last three months, within a fourth to half a mile from your home. If you live in an area where there are only a few comparable homes or the property is rural, you can extend this distance. Pay attention to dividing lines, such as major streets or railroads. Don’t compare any homes on different sides of the dividing line.
Compare homes with a similar square footage to yours and ones with similar ages. It’s possible that you can have a home built in 1950 next to a home built in 1990, and the home value will differ between the two.
Compare the original listing price to the final sales price to see if there were any price reductions. Additionally, compare the final sale price to the actual sold price to determine ratios. Adjust your pricing for house size, configuration, and any additional amenities the home may or may not have.
The sales price for pending sales is unknown until the transaction closes. However, you can call the listing agent and ask for the price. Some listing agents may tell you what the home is selling for. You should also take note of how long the home has been on the market. This can give you an indication of how long your home will stay on market.
Withdrawn and/or expired listings
Why didn’t these homes sell? Look for patterns to see if there was something underlying for all of them or if it was individual reasons concerning the home. If the sellers used a cheap brokerage firm, that could be a sign that the firm didn’t spend the money to advertise their home and you should mark not to use that firm.
What is the market trend? In a seller’s market, you should be able to price your home higher than the last comparable sale, since there are less inventory and more buyers. In a balanced market, try setting your price at what the last comparable home sold for. In a buyer’s market, you may want to price your home a little lower, since there are more inventory and fewer buyers.