If you’ve made the decision to sell your home, chances are you’re expecting a return on your investment. You can have a real estate agent help you with the process of selling your house but you can make even more money if you do it yourself. Pricing a home can be a tricky process if you lack experience. If you price your home too high, you run the risk of not getting any offers. If you price your home too low, you could cheat yourself out of thousands of dollars.
Here is a guide for figuring out how to price your home to sell:
1. Look at comparable homes in your area
One of the most important steps in determining a price for your home is looking at comparable homes in your area. A comparable, also known as a comp, is a home similar to yours that has currently been put on the market or has recently sold. More or less value can be placed on a home depending on its size, age, and features, so it is important that the homes that are being compared to yours are as similar as possible. Here are some of the aspects to consider when comparing your home:
- Age: should be built within 5 years of your home
- Size: should have similar lot size and square footage (within 10%)
- Proximity: should be less than one mile from your home (preferably 1/4 to 1/2 mile) and within the same school district
- Special features: should have similar features to your home like a large backyard, pool, or renovated basement
- Rooms: should be listed/sold within the last 3-6 months There are two main ways to go about effectively searching for comparables. You can choose to do it yourself or you can use a comparative market analysis which can be provided by a real estate agent.
Hire a real estate agent to provide you with a Comparative Market Analysis (CMA)
If you are working with a real estate agent that will help you sell your home, you will be provided with a comparative market analysis. A comparative market analysis (CMA) is a more detailed list of homes that have been recently listed and sold in your area. A CMA should consist of more than just comparables. Most will also include details about the homes sold, such as the current market conditions, days on market, absorption rate/inventory levels, and the list price/sale price ratio. CMAs can help a seller figure out the most effective strategies to sell their home the quickest.
Use online resources to help you compare homes yourself
It is possible to find comps all on your own. With the help of online resources such as real estate listings and public property records, you will be able to get a good idea of your home’s value. There are also online house price estimators that will do all of the research for you and generate an estimated price for how much you should sell your home. Even if you don’t plan on hiring a real estate agent for the process of selling your home, you can still request a CMA from a real estate agent. Some will provide you with one free of charge in hopes of gaining you as a client.
2. Review the market inventory
A basic economics principle everyone should know is the law of supply and demand. Supply and demand works the same in real estate as in any other consumer market. If your home is one of 25 homes up for sale in your neighborhood, it can be difficult to sell your home for your desired price. However, if you’re one of only very few homes being sold in your neighborhood, you may be able to sell your home for your asking price or potentially even higher because there may be more buyers than there are homes.
Follow these rules for these 3 real estate market types:
- There are more homes than there are buyers.
- Price your home slightly lower than the competition.
- There is limited inventory with buyers competing for fewer homes.
- Add about 10% to a comparable sale price.
- There is a good balance between the number of buyers and the number of homes for sale.
- Price your home similar to nearby comparables.
3. Optimize pricing for online searches
As the world increasingly becomes more digital, more people are searching for and buying homes online. Posting an online listing for your home can be a much more effective method for finding the most potential buyers. However, this will not work if those potential buyers don’t see your listing. You will need to be strategic in your pricing. Many buyers will have a set price range that they are looking for when home shopping. They will most likely filter their search results to that price range. It is important to remember that most real estate websites categorize homes in $75,000 increments and not $1,000 increments. Consider listing your home for a price that is just below the nearest round number. For instance, if you really want to sell your home for $354,000, price it for $349,000 so that it will show up for buyers that are looking for homes with a max price of $350,000.
4. Allow wiggle room for negotiation
Many buyers will insist on negotiating the cost of your home. Instead of pricing it at the lowest amount that you can afford to sell it, consider pricing it at $5,000 or $10,000 more. Doing this will allow you let your buyer “win” the negotiation while actually giving you a selling price that matches or even exceeds your expectations. If you don’t want to lower the cost of your home, consider covering closing costs for your buyer. It can be difficult to come up with the money for closing on a home, even for well-off buyers. Offering to cover closing costs can help seal the deal on your home while keeping your selling price up.
5. Cut price after listing if necessary
No one likes having to go back and lower the listing price of their home. However, it is much more common than you think and can sometimes be necessary. It is most important that you recognize when your asking price is too high and make a change as soon as possible. This way you can attract buyers’ attention with a price cut and sell your home sooner.
Here is a list of signs that the listing price on your house may be too high:
- The appraisal came back lower than your listing price.
- Several people tell you that the price is too high.
- You have yet to schedule any showings.
- No one has attended any open house tours.
- You have yet to receive any offers.
- Other active listings in your area are priced much lower.
If you’ve followed all of the steps above and are still unsure about the price of your home, there is a solution. Some brokerages or websites will allow you to participate in what is called a “soft roll-out” plan. This allows your home to be posted on a “coming soon” list. You will have time to test the waters and see how your home will fare against competition in the market. This way you will be able to change the price of your home before it goes up for sale instead of editing the official listing.
With either the help of a professional or the knowledge you’ve gained from extensive research, you are sure to be able sell your home for the best price in no time.