How To Price Your Home To Sell?
Everyone wants the highest price for their home. However, do you know how much it is really worth?
The price of your home is the single most important factor for selling your home quickly. Overpriced property can turn off buyers, even after you decide to lower the price after getting no decent initial offers. On the other hand, pricing it too low can leave you on the hook for any remaining mortgage payments and have you later regret not pricing it higher.
So, how can you price your home to sell? Read on to discover a number of methods to arrive at a price that will attract buyers and fetch the price that you deserve.
Do Your Research
Pricing your home isn’t a number you pick out of thin air - or based on how much you initially paid for it. Instead, pricing requires due diligence on your part. To do so, you’ll have to compare multiple sources to arrive at an estimate.
Perhaps the most reliable source is by checking recently-sold homes or those that have come on the market. Websites like Zillow.com and others can provide this data for similar houses based on location, square footage, amenities, and more.
Cross-reference this data with a website like City-Data.com, which offers the ability to check the house values of homes with a useful map interface. City-Data also has a forum for each city and state, enabling you to ask questions about areas to others in the area. Posting on a forum can give you a clearer idea of your home, enabling you to verify your home’s value and ask for outside opinions on what your home is worth.
Should You Rely on Your Realtor?
Are you working with a realtor to sell your home?
Trusting a realtor can be a good option at arriving at a figure, but remember that their incentive is based on commission. With most commissions averaging 6% (with 3% of that going to the brokerage firm), there is relatively little difference between a home that sells for $200,000 and $180,000. This means a difference $12,000 and $10,400, respectively, for a $1,600 difference, or just $800.
Realtors know that lower-priced homes sell quicker and that more sales volume is better for their bottom line. Don’t feel pressured to agree with their price until you’ve actually listed your home. If you don’t get any offers, you can adjust your price at a later date to drum up leads, but stick to your guns if you feel that you are getting short-changed.
If you haven’t signed an exclusivity agreement with a realtor, you may be tempted to sell your home for less to avoid the commission fee. In the end, you’ll pay about the same, but the trade-off is that you will have to handle every step of the home sale on your own.
Hire a Home Appraiser
Setting up a home appraiser is a smart move to find out what your home is worth. A home appraiser will take a look at your home’s interior, exterior, and surrounding property to arrive at a figure that lenders regularly hire them for refinancing and other financial assessments.
Home appraisals can also be invaluable if you learn about potential problems in the future. This is especially true for older homes, where new building codes need to be adhered to in order for a legal sale (vs. just a home sold in “as-is” condition). As an example, many older homes contain asbestos, which is an environmental and health hazard that generally needs to be removed or encapsulated before transferring ownership.
Factor in Amenities
Another factor about pricing your home is to factor in the amenities. Your home’s amenities can take the form of extras that enhance your home’s value, such as a sauna, detached garage, shed, and so forth. Each of these can increase the price of similarly-sized homes and attract more buyers.
There is a flipside: A swimming pool is a great feature for your home, but realize that many insurance companies charge a premium for them. Additionally, property taxes will be higher and may turn off buyers that don’t want to spend the time and money to remove these features. Considering that higher insurance and taxes factor into the decision-making process, you may end up making concessions during the negotiation phase that readjusts your home’s value.
Location, Location, Location
In addition to what’s featured on your property, where it is located has a significant effect on how you can price your home.
If your home is located near schools, you can expect to fetch a higher price. On the other hand, if you are located in an area that is near an undesirable location, such as in proximity to noise pollution from highways or has an odor from industrial plants, you can expect a lower price.
The surrounding neighborhood also should be factored. If you live in a rundown area - even if your home is immaculate - you may want to lower the asking price to entice buyers that may be hoping for an upswing. Other elements, such as your neighbors’ upkeep and proximity to crime-infested areas (such as being near a jail/prison), play a part in how much your home is worth.
Of course, the county where your home is located has an effect as well. If you live in a high-tax area or poorly-policed area, some buyers may be wary of purchasing the home.