Setting the right price for your home can be an overwhelming undertaking, but it’s so important! Luckily, our wonderful real estate agents can help us compute all of the housing market lingo, data and overall confusion. That being said, it’s still helpful to understand how the process generally works. We’ve arranged these seven important considerations when pricing your home for sale:
1. Seek Advice From a Real Estate Expert.
You don’t have to figure this stuff out on your own! Real estate professionals are here to guide you. Trust in the value of their expertise! Your real estate agent can conduct a CMA (Comparable Market Analysis), which will do most of the heavy lifting for you. A CMA is a home evaluation tool that real estate experts use to estimate how much your property is worth. Avoid automated CMA’s on big company websites or price tools like those found on Zillow, both rely on inaccurate data. The only way to get an accurate CMA is through a trusted real estate agent”.
2. Examine the Prices of Currently Listed and Recently Sold “comps.”
It is crucial to study “comparables,” often referred to as “comps,” when pricing a house for sale. Comps are recently sold homes that are similar to the one you are selling in terms of size, age, location and condition. Take a look at homes that have sold within the past year – or more ideally, the past three months – that are comparable to yours and in the same area. Generally, you will not want to deviate far from these figures.
Take the characteristics of the area into consideration, as well. For example, is your listing in a very remote area where you may be hard-pressed to find any decent comps? In this case, it may be necessary to look over a wider area to find properties similar to yours, or you can even consider a different residential area with similar features. In other areas, the value of a home can increase or decrease significantly just by going around the block or “across the tracks.” It’s important to be aware of these details when analyzing comps!
3. Study How Comps Were Listed Versus Sold.
All homes put on the market are initially priced and listed according to various factors. But the selling price can be higher, if the seller is lucky, or lower. When examining your comps, it’s helpful to look at these ratios to have an idea of market fluctuations, and what sellers may have done right or wrong. Your real estate expert can help you learn these details.
4. Review How Long Comps Were on the Market.
Investigate how quickly or slowly comps were sold, or even withdrawn or expired, for valuable pricing feedback. If certain comparables were sold much faster than others, try to find out why.
5. Pay Special Attention to the Square Footage of Comps.
It’s good to keep in mind that all listings will eventually be appraised. Appraisers aim for accuracy, but even so they can stray more than 10-20% on their gross square footage calculations. With this in mind, it’s best to compare homes with very similar square footage in order to come near the eventual appraised value.
6. Know the Market Conditions.
Take everything you learn about comps and then analyze the current market conditions the best you can. How is supply and demand currently affecting the sales prices for comps? Typically you’ll want to set your price close to the last few that have sold in your area, but if supply is lower and demand higher, consider raising your listing 10% or so. Ask your Realtor for more tips on how to factor in the current market.
7. Consider Starting Lower.
When in doubt, shoot low, not high (not too low, of course)! Setting your price under what buyers are ready to pay will get you multiple offers. Prices can be adjusted, of course, but it’s far better to start lower and then raise your price rather than starting too high. Alternatively, shooting a bit lower means that your listing may end up the subject of a buyers’ competition, which means you’ll ideally have offers above your asking price!
Pricing real estate can be a daunting task. Fortunately, the modern world offers a plethora of information to help us get to the right asking price more efficiently. This includes valuable information about comparables, as well as significant steps like the seven aforementioned. Also, remember that your real estate professional can offer valuable assistance in pricing your home.