Price Your Home To Sell
There are several factors that affect the price of your home such as location, interest rates, and your local market. These factors must be carefully weighed when you are deciding to list your home for sale. Realtors are experts at evaluating these things and they can advise you on how to price your home so that it sells in an appropriate time period and for the best value.
Factors Affecting Price:
· Location
Prices rise in markets where the population is growing and there is a lack of houses
for sale, where job growth is increasing, where the best schools are, etc.
· Supply and Demand
If there is a glut of houses on the market (More Supply) than the demand for homes is
spread thinner among them, and each home will get less attention. Conversely, if
there are only a few houses on the market (Low Supply) and many buyers (High
Demand), they will be competing for a limited commodity which can lead to increased
interest.
· Time Available Before the Move
If the seller has to sell in a short amount of time, for a job transfer perhaps, they will
not be able to price as high. They can not afford to wait for that higher offer and are
much better off pricing it fairly or even 1-2% below market value to get attention right
away. If the sellers don’t need to sell immediately then they have the luxury of waiting
for the ‘right buyer’ to offer the price they want. Keep in mind that even if you can wait
it doesn’t mean that you should. The market changes everyday and waiting a month
to lower your price could mean that you lose thousands of dollars.
· Interest Rates
The lower the interest rates are, the more the buyers are able to afford to buy. This
means that there will be even more qualified buyers for your home.
· Condition
What is the general condition of the house? Have you kept up with repairs? Is it
clean and sparkling or dark and dingy? Does your home have good curb appeal? Be
sure that before you list your home you have cleaned it top to bottom so that it
shines, picked up clutter, and landscaped the yard as best you can.
· Amenities
Does your home have updated appliances, counter tops, bathrooms and low-
maintenance landscaping? These things aren’t something you should invest in if you
want to sell soon, but if you already have them they will give your house an advantage
once it’s on the market.
Sale prices are NOT based on…
· Emotion
Buyers aren’t interested in how many great times you and your family have had in you
house. They also don’t care how long it took you to install those new cabinets or re-
paint all the bedrooms. The buyers are only looking for the facts and the tangible
things that give your home value.
· What the buyer ‘needs’ to get in order to buy a new home
Please be thankful for your homes appreciation. Despite the recent slow down in the
market, almost all property owners still saw an average 8% in appreciation over the
last decade. This is free money that you get just by living in your house and taking
care of it. Don’t get too greedy when it is time to sell and don’t have a specific price in
mind that you ‘must’ get.
Should You Price High To Start?
Many sellers are under the impression that it is okay to start their home at a price higher than the market can handle because they can always adjust it later. This is a huge mistake that can lead to frustration and the loss of thousands of dollars. If the list price is too high to start you will immediately push away prospective buyers who would otherwise be prime candidates to purchase your home. Also, the majority of buyers work with a buying agent and these agents will know that your home is overpriced and advise their clients of that before they even get to see it.
Pricing too high is also a waste of marketing. When your home is first listed a good Realtor will advertise it in many ways, possibly including the Multiple Listing Service, company websites, personal websites, homes magazines and newspapers. When interested buyers see the ads and contact their Realtors for more information they will find out that you have overpriced and will be discouraged from looking at it. At this point you and your Realtor have wasted time and effort. Also, agents and buyers pay the most attention to the newest listings on the market. Agents specifically get ‘hot sheets’ everyday that shows all the new houses. If your initial price is over fair market value, you are missing the best opportunity to get exposure on the market.
Let’s say that you knowingly over price to start because you knew that a price adjustment was an option later on. The risk is that overpricing wastes time and something unexpected could change your circumstances. You may have found your dream home and need to move soon, or you may want to start your retirement as soon as possible. Situations like this could make you desperate to sell and you might be forced to lower the sale price, possibly below market value. You may also be forced to accept a lower offer just so that you can move out in time.
The Figure below shows how long it will typically take to sell a house depending on its price. The CMA, or Comparative Market Analysis, is the evaluation prepared by your Realtor that explains your local market and the range for which your house fits in.
