The quick flip answer to the title question is to list your home for sale at the highest price current buyers will pay…Yay! That was easy. Actually, it’s accurate but the trick is to figure out just what that price happens to be today. First, let’s take a look at the pitfalls and likely results of listing at the wrong price:
Too High: given the current market situation, there is going to be a narrow range in which your home can be priced that will make it competitive in the marketplace and get you a price you’ll be satisfied to bank. It’s that “competition” thing that limits the upper end of your home’s price range.
Over-pricing your home for the current market and in comparison to similar properties in the area will cause it to sit on the market for longer, and buyers do pay attention to the number of days a home has been on the market before making an offer. Don’t forget your costs of holding as well. That’s the money you’re spending on mortgage payments, repairs, maintenance and taxes while you wait for the sale.
Too Low: you’re certainly going to avoid the long “days on market” situation, as pricing your home below the current market will generally get it sold in a hurry. Of course, then we’re going to be looking back and wondering just how much money we left on the table. Also, since buyers expect some give-and-take bargaining, your lower list price is just a starting point, and they start from there looking downward for an offer.
So, what’s the right number, and how do we figure that out? Your real estate professional spends their workdays monitoring the local real estate market. They’re constantly checking sold prices for homes in your area, and they’re involved in negotiations from both the buyer and seller sides of the transaction. However, they don’t just pop out a price based on this knowledge. The do what’s called a CMA, Comparative Market Analysis.
Recent sold property data is gathered for homes sold in the nearby area and having the same features and size as the home to be listed. Of course, exact feature matches are not always available; they also use “adjustment factors” to adjust the sold prices of the comparable properties to bring them to a closer feature match. This can be adding or subtracting the value of a bedroom, bathroom or garage space when the homes are different. There are other factors, and you real estate professional will carry the calculation through to a result that indicates the approximate market value based on these comparable sold property prices.
There’s more though. You see, the nature of the comparable sold property prices is that they’re in the past, even if only weeks or months in the past. Because homes are coming on the market, being pulled off the market, and being sold daily, today’s market can be different from the market conditions when those comp properties sold. So, your real estate professional will also study the current competition to see if the price arrived at is going to work, or whether it should be adjusted up or down due to current market competition.
This is a brief description of an involved process, but you need not worry about the mechanics of it. Your real estate professional will involve you in the process and help you to price your home properly for the greatest return on your investment and a prompt sale. If you are like me, then you want to do your own research as well. I use RealtyTrac.com as my source for finding the true value and any piece of property I am evaluating. Using RealtyTracs’ sales data, market trends, and even the home price estimator, I can typically pinpoint the perfect listing price to move my properties virtually overnight.
Please reach out to me and let me know your success stories.
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