The Ultimate Home Owner's Guide to Pricing a Home
INTRODUCTION
Thank you for downloading our Ultimate Homebuyer's Guide to Pricing a Home.
This guide will give you the information you need to decide on a listing price that fits your goals for selling your home.Selling a home can be an exciting and challenging process, and pricing is one of the most critical factors that can impact the sale of your house. Pricing your home well is essential to attracting the most potential buyers and ensuring a successful sale. However, many sellers make decisions that can result in their homes sitting on the market too long or selling for less than their actual value.
One of the biggest mistakes sellers make is to overprice their home when they list it. This overpricing can result in fewer potential buyers and a longer time on the market. Of course, leaving money on the table is an understandable concern, and underpricing can mean a lower return on investment. To avoid these pitfalls when pricing, it is best to rely on something other than home valuation tools or setting a price based on emotional attachment to the home. Remember, the most exposure for your listing happens in the first week it's on the market, so getting on the track right from the start is crucial.
In this guide, we'll outline some critical steps to help you price your home to sell for the most money, with the least hassle and a shorter amount of time on the market. If at any point you have questions about pricing or any other issue selling or buying, give us a call or send us an email. We will be happy to help.
ASSESS YOUR HOME
The first step in the pricing process is to evaluate your home. Consider its size, age, and architectural style. Assess any upgrades or renovations you have done and note any necessary repairs or maintenance issues that require attention. You can even get a pre-listing home inspection or have your home evaluated by an agent with experience in your area. Having an independent review of your home is helpful when putting together your plan.
A well-maintained and updated home generally commands a higher value than a home needing work, and buyers strongly prefer move-in-ready properties. So, it's vital to thoroughly assess your home before deciding to sell and take steps to improve your position in the market when you do.
Some projects yield a higher return on investment than others, so comparing your home to recently sold properties can help you to identify the upgrades that add the most value.
Moreover, it is important to consider how specific projects can enhance your quality of life. Even if the return on investment may take time, the joy and satisfaction derived from the improvements can be significant. When possible, prioritize projects that can elevate your happiness, such as updating the primary bathroom or completing the basement. These endeavors can offer both long-term value and present-day enjoyment
UNDERSTAND THE MARKET
Before setting a price for your home, it's essential to understand your local real estate market. Research recent sales in your area to understand what similar homes have sold for. It's also helpful when pricing your house to look at homes currently for sale to see how they are priced, their condition, and the different features each home has.
It can be challenging to find homes that are exactly like yours. Depending on the type of neighborhood you live in, you might have to use a house that is close but not exactly alike. That is ok. Look for the homes that most closely match your bedroom and bathroom count and significant features like condition, a basement, square footage, pool, lot size, or house style (ranch, 2-story, split level, etc.). Remember, when calculating your house’s estimated market value, you will consider these differences in your evaluation.
Additionally, look for trends in the market, such as rising or falling home values or how long a house is on the market before it sells. Don’t forget to consider the neighborhood, schools, and amenities, as these can impact the value of your home. It is always advised to stay in your neighborhood or school district if possible to make it easier to compare values.Also, ensure you don’t go too far back in time for past sales. That may be difficult in a market where few houses are being listed and sold, but do your best to keep it to the most recent sales in your immediate area
DETERMINE YOUR HOME'S ESTIMATED MARKET VALUE
You can sometimes use virtual home valuation tools to get an estimate, but remember that these tools may only be partially accurate. These valuations, which websites like Zillow and Open Door use, depend on information in tax records or public sales data about the property, which might or might not portray an accurate picture. For example, if any of the houses they are using to create the estimated value have had any updates or remodeling done, then these estimates would not take that into account if it has never been listed in that condition. These virtual valuations are a great marketing tool for homeowners to start thinking about the money they might realize from their house sale. Still, it would be best if you had a more accurate snapshot.
Working with a real estate agent to conduct a Comparative Market Analysis (CMA) can provide more detailed information. They will have access to pictures of past sales and may have been in the homes to see their condition or how they looked during the listing. Also, a knowledgeable agent will understand how to make the necessary adjustments to create an accurate picture of your home’s value when on the market. Generating a CMA is a more precise method of gauging the realistic range for your home's market value.
Finally, you could consider hiring a professional appraiser to determine your home's value. You should understand that appraised value doesn't always equate to market value. Once you add the human element of buyers into the equation, the appraisal math may not be as accurate. Still, it does give you a great idea of how much of a loan someone could get on the property, and it also gives you an idea of how much equity you have. This can help you decide on renovation or remodeling projects to impact that value.
SET YOUR PRICE
Now that you have calculated a good range of estimated market values, it is time to decide on a listing price for your home. So the obvious next step is to pick the highest price in the range, but here is where understanding the market comes into play.
What factors should you consider when selecting a price from this range?
Two significant factors that should be considered are the amount of inventory currently on the market and the rate homes are selling in the area.
For example, six homes went up for sale in your area during the past six months. Five of those homes ended up selling during that period. This means that 83% of the homes listed sold. It also tells us that a house sells every 1.2 months in your area. Now you know that houses sell at a very high rate and inventory is very low. You could then make a case for pricing your home on the high end of the range because demand for a house is very high, and the inventory of homes to buy is low.
High demand and low inventory alone won't guarantee a sale. Another factor that plays into buyers' minds is perceived value. You must consider presenting a high-quality product to buyers to get that top dollar. This means, for example, getting your house painted if it's been a few years or getting your home professionally deep-cleaned before listing. You can do many things to inspire buyers to make their best offers and to get multiple buyers to make those offers. During the assessment phase, you could have identified some things that need to be addressed to push your home into that upper tier.
Additionally, there might be other factors that could play a role in your decision on price. There may be power lines in the backyard, or your house may back up to the golf course. These are things that can influence buyers' perception of value.
THI FINISH LINE - SOLD
Pricing your home well is crucial to achieving a successful sale and reaching your goals. By understanding the local real estate market, assessing your home's features and condition, and determining its value, you can set a realistic price that attracts more potential buyers and maximizes your return on investment. It also helps to work with a real estate professional that understands how to be a good partner and is in it to help you meet your goals. They can provide valuable information and guidance so you can make the best decisions as you navigate listing and selling your home.
Remember to be flexible and willing to make adjustments based on changing market conditions and timely feedback from potential buyers as they evaluate your home. The goal, ultimately, is to get that house under contract and closed so you can move forward and focus on your next move.
Thanks for reading our guide, and if you have any questions or concerns with this or any other issues on selling or buying a home, give us a call.
