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The Art of Pricing Your Home to Sell

Ready?  If you’ve done your homework, you should be able to take a pretty good stab at setting the price of your home. Let’s walk through the steps in order:

  1. Use Your “Comps” – Your Realtor will provide you with the current comparable sales within your neighborhood. You should be looking at the average sold prices for homes that are similar to yours (if possible): within 100 square feet, same number of beds/baths, same number of stories. Items that that add to value are: corner lot, large lot, pool, additions, bedroom/bath options, big renovations or updates.
  1. Find a “Magic” Price –Your asking price should be within 10 percent of the average sold price in your neighborhood. Once you have a target in mind, think about a price that motivates people more than others. Its generally better to keep within a $25,000 block, for example, rather than $305,000, go with $299,950. Lenders generally stay within $25,000 lending amounts and Realtors searching homes for their clients in MLS generally do the same. You don’t want to get left out by being the odd ball at $304,900.
  2. Find the “Soft Spot” — Also called “price banding,” this is the practice of looking over the inventory in your neighborhood and finding the “soft spot.” For example, look at the sale prices of homes in your neighborhood. Prices tend to get bunched up as inventory moves along. Find an empty spot so your home is separated from the pack. For example, four homes are priced in the $274,000-$276,000 range and the next set of homes start around $290,000 and up. You should take advantage of the $280,000 price band.

     4. Considerations— Other factors that play into pricing your home:

  • Time of year — Ah, spring. Spring is considered the best season to sell a home since families are trying to get situated before the start of the next school year; however, fall is a close second since it comes right after the quiet days of summer when most people are away on vacation. Winter is usually the worst season — especially in areas where it snows — but also because of the Thanksgiving, Christmas, and New Year’s holidays when people’s minds are on socializing, not buying or selling a home.
  • Interest rates — If rates are reasonable, it seems everyone is in the market for a home. But, if interest rates start to climb or they do not seem reasonable, you’ll see less action on the street.
  • Inventory — In Economics 101, we were taught the basics of supply and demand. This theory laid the foundation of what drives costs, and so it goes with real estate. If your home is one of 20 in the neighborhood that’s for sale, you will have a hard time getting your price since the supply is great and the demand may not be so great. However, if it’s a hot market and you have a home in a great neighborhood, chances are you will get your asking price and maybe even more. Scope out the neighborhood to see if inventory is high or low. (And ask a real estate agent.)
  1. Comparative Market Analysis (CMA)— If you’re working with an agent, you will automatically get a CMA, which includes recent sales and days on the market. If you don’t currently have an Agent then don’t be afraid of asking. We provide these free of charge with no strings attached. Realtors provide these free of charge. We do CMA reports without ever having to step foot in your home and chances are we have seen the floorplan and know the builder well.

 

Free Home Valuation Report

 

  1. Comparative Shopping – Put yourself in the Buyer’s shoes and see what else you could get for the asking price of your home.  Its even a great idea to have your Realtor take you to show you other similar homes that are in the same neighborhood for comparison. Often Sellers are too emotionally attached to their homes to objectively place a value on the property.  Once you start looking around to see else is selling for that price, you might have a better idea of how appealing your house is in the current market.

 

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