Setting the Price on Your Home

In addition to location and condition, the pricing of a house today is probably the single largest determining factor on how quickly a home will or will not sell. Some sellers have a tendency to put a large amount of emphasis on the price, without also focusing on condition. Often times they end up with a home that is overpriced for it's current condition. 

We hear sellers say that someone will buy it.  But, the home must appraise in today's market when the buyer applies for a mortgage. If the house is priced too high, then the lender will not loan more money on the property than what it's worth. So adjustments will have to be made.

Pricing is key when the property first goes on the market .

1) An overpriced house will not sell. The longer it sits on the market, the more stale it becomes.  Buyers know how long it's been for sale and they lose interest. If no one else wants it, then they don't want it either, is often the mentality.

2) Some say price it high, buyers will make an offer. They don't and they won't.  An overpriced listing is an indication of an unmotivated or unrealistic seller.

3) Sellers say they can always reduce the price on their overpriced listing. Often times by the time they do a price reduction, they are still chasing the market in a declining market. And, they are still too high. Buyers will make a more realistic offer on an attractively priced home, rather than on an overpriced listing. Often overpriced listings get no showings and receive no offers at all.

Factors that affect price

1) Homes in great locations are likely to sell more quickly than in mediocre locales.  Thus, they will fetch a higher price.

2) A well-maintained house sells for more money than a home with deferred maintenance. Often times it's worth putting that fresh coat of paint on the inside and outside of the home before the house goes on the market.

3) Homes that have popular amenities for an area, will help it sell more quickly than one without those extra goodies.

Determining the proper asking price

1) What have similar homes in your neighborhood sold for in the past 3 months?  How do they compare in terms of size, upkeep and amenities?  Have a Realtor do a CMA, Comparable Market Analysis.  

2) What similar homes are for sale in the area?  In a declining market be sure you know what is currently for sale.  Those are a large determining factor on where yours should be priced.

3) What similar homes are currently under contract? 

4) Figure out your net proceeds. It is imperative that you know exactly what your sales expenses are going to be, so that you are certain that you are in a positive position before selling.  If not, then you may have to look at other options that suit your situation.