Pricing Your Home for Sale

Review Comparable Listings and Recent Sales Activity

Your agent can give you information to help you review homes similar to yours that was or is listed in your same neighborhood over the past six months. Also be realistic about the location of your home. If you back to a major street, railroad tracks, retail center, etc… this will be perceived as a negative and could adversely affect the value of your home. Perceptions and desirability have tremendous value and impact upon a buyer’s decision to purchase. Finally, compare apples to apples. You should review the sales activity on properties that are similar in age, similar in characteristics or features and similar in square footage, within 10% up or down from your home. Adjust pricing for lot size variances, configuration and amenities or upgrades.

Active Listings

These matter only as they compare to your listing, but bear in mind that sellers can ask whatever they want. However, if they are priced below your home and comparable, buyer’s may pass on your property if they can get a better deal for virtually the same thing down the street. To see what buyers will see, tour these homes. Make note of what you like and dislike, the general feeling you get upon entering these homes. If possible, recreate those feelings of reception in your own home. These homes are your competition. Ask yourself why a buyer would prefer your home over any of these and adjust your price accordingly.

Withdrawn & Expired Listings

Look at the history for expired and withdrawn listings to determine whether any were taken off the market and relisted. If so, add those days on market to these listing time periods to arrive at an actual number of days on market. Also, look for patterns as to why these homes did not sell and the common factors they share. Were they priced too high? Which brokerage had the listing: a company that ordinarily sells everything it lists or was it a discount brokerage that might not have spent money on marketing? Think about the steps you can take to prevent your home from becoming an expired listing.

Price per Square Foot Cost Comparisons

Remember that after you receive an offer, the buyer’s lender will order an appraisal, so you want to ensure your home compares to homes of similar square footage. Appraisers often do not deviate more than 25% and prefer to stay within 10% of net square footage computations. For example, if your home is 2000 sq. ft., comparable homes are those sized 1800 to 2200 sq. ft. Average square foot cost does not mean you can multiply your square footage by that number unless your home is average sized. Also keep in mind that the price per square foot rises as the size of the home decreases and it decreases as the size increases, meaning larger homes have a smaller square foot cost and smaller homes have a larger square foot cost.

Pending Sales & Solds

When a sale is pending, the sales price is unknown until the transactions close. Don’t let that stop your Agent from calling the listing agent to ask the sale price. Some Agents will give the information. Some won’t. Also, make note of the days on market, which may have a direct bearing on how long it will take before you see an offer on your home. Examine the history of these listings to determine price reductions.

Current Market Conditions)

After you have collected all your data, the next step is to analyze the data based on market conditions. For comparison purposes, let’s say the last three comparable sales in your neighborhood were $150,000. In a buyer’s market, your sales price might allow some wiggle room for negotiation but be strong enough (near the last comparable sale) to entice a buyer to tour your home. To sell in this market, you might need to price your home at $149,900, settling for $145,000. In a seller’s market, you might want to add 10% more to the last comparable sale. When there is little inventory and many buyers, you can ask more than the last comparable sale and likely get it. So that $150,000 home might sell at $165,000 or more. In a balanced or neutral market, you may want to initially set your price at the last comparable sale and then adjust for the market trend. For example, if the last sale closed three months ago, but the median price has edged upwards of 1% per month, pricing at $154,500 would make sense. Let the Ronnie and Cathy Matthews team provide professional guidance to help you price your home appropriately to sell in any kind of market.