When you decide to sell your home, naturally you want to get the best price you can. Setting the right price to maximize your profits all begins with finding out how much your home is worth.
There is a lot to consider when determining your home’s value. The current market, the economy, the location, condition, and style of your home, and how it compares to others on the market all play a part in pricing your property. Factor in the emotional attachment you have to your “home sweet home” and the whole process can feel overwhelming.
Your realtor will help you sort through all that goes into the pricing equation, but there are things you can do to be an active participant in the process.
Step 1: Know the Market
The housing market is always changing. Knowing whether you are working within a buyer’s market or a seller’s market can help steer you to the right pricing strategy.
In a buyer’s market, there are more homes for sale than there are buyers. In this scenario, sellers need to find a way to outshine their competition. This could mean highlighting special features of your home, listing at a slightly lower price than similar houses, or offering concessions or allowances.
In a seller’s market, there are more buyers than properties available. This is the ideal situation for sellers, as it often yields higher prices and the potential for multiple offers, possibly above asking price.
Step 2: Prepare to Make a Good First Impression
Whatever the market conditions, you can add value to your house by getting making it is in tip-top condition. Simply making sure all rooms are clean and uncluttered will help prospective buyers envision themselves calling your property their home. Beyond that, be prepared to make some changes if any features of your house are outdated.
“The majority of buyers want as close to turnkey as they can get,” says Jill Landsman of the Northern Virginia Association of Realtors. “The seller should try to update, not remodel, as much as they can.” Landsman recommends sellers consider fresh paint, new carpeting, and updating old appliances, all low cost refreshes known to have an excellent return on investment.
Step 3: Size up the Competition
Now that you have your house looking its very best, it’s time to examine the asking prices of homes similar to yours that are on the market. You will also want to look at homes that have sold in the last three months. This comparison should be apples to apples, looking at things like location, lot size, square footage, and the style and condition of your home.
The internet makes it easy for prospective sellers to do their homework, with a myriad of real estate sites that provide listing information. One of the best, according to the National Association of Realtors, is realtor.com, recommended for its large database of listings and property records as well as informative articles about everything from mortgages and refinancing to home improvements and housing trends.
When your research is complete, it’s time to compare notes with your realtor, who will provide you with a Comparative Market Analysis. This is a thorough report of the sales and listings of comparable homes in your area. Together you and your realtor can analyze the difference between the original listing prices and final sales prices to gauge how much wiggle room you might have with your own pricing.
Step 4: Walk the Too High/Too Low Tightrope
When determining that “just right” asking price, it can be tempting to set the price either higher or lower than the competition. Perhaps you have done major upgrades on your property and are hoping for a return on your investment. Maybe you want to sell fast, so think a lower price will help your house move quickly.
Keep in mind that if you set your price too high, you may discourage potential buyers from touring your home. A plan to reduce the price if the house sits too long isn’t necessarily the best strategy.
“You’re ticking up days on the market,” says Landsman. “Buyers become suspicious, even though it could be that the price was set too high.”
A lower priced home could also raise questions in buyers minds about potential problems with the property. One the other hand, your low price may get more traffic, maybe even attracting multiple buyers, but there is no guarantee that will happen. Most importantly, with a price that’s too low, you could walk away leaving money on the table.
Step 5: Be Realistic
If you find yourself struggling with finding a price you are comfortable with, try to remove emotion as much as possible and keep your eye on the ultimate goal of selling your house at a good price.
After factoring in all the conditions and research, ask yourself “what is the actual price I’d be willing to go for," Landsman says. "Then try to set the price in that range.”