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Pricing a home for sale takes time and research. There are some things that you can do to get started with the process. Using an online website or online calculator is one place to start and is fairly quick and free. It’s best to use five different sites, eliminate the ones that are either too high or too low and average the rest to get a general idea. While using these sites are a beginning, they aren’t going to be the most accurate means to determine a price for your home. They only look at square foot averages without taking into consideration the condition of your home, location, upgrades, etc.
To have a true estimate of value, you’ll need to speak with a listing agent who can prepare a comparable market analysis (CMA). You can also hire an appraiser to give you a value before putting it on the market.
It’s important to think like a buyer when pricing your home. Not all buyers see the value in the custom door that cost you a fortune or the whirlpool tub and hand painted faux in your bathroom. You’ve enjoyed the use of your home and made special improvements for your own pleasure, a new owner may come in and tear it all out and redo it to their liking. Be wary of overpricing something because of its sentimental value, look at your home from the eyes of the buyer.
You also need to know your competition because a buyer will be looking at other homes besides yours, you should take a look at other homes as well. But remember active homes that have been on the market for some time, are still active for a reason. How does your home stack up against homes that have sold?
Know the market by looking at trends. Look at what homes in your neighborhood were selling for one year ago, six months ago, and three months ago. Are the prices trending up or down? If inventory is low and it’s a seller’s market, you could get an additional five-ten percent. If it’s a buyer’s market, you should subtract ten percent from your price. Price ahead of the market curve, for example if prices are decreasing and you’ve set your home at a fair market value, in two months, your home will be overpriced. If prices are decreasing by 1% each month, knock 3% off your fair price to make your home competitive. But don’t overprice in an upswing market or you’ll be on the market for an extended period and buyers will wonder what’s wrong with your home.
Every seller dreams of having a bidding war and the best way to make this happen is by underpricing your home. In a super-hot market, taking 10% off the fair market value, could bring in 10% more. The key is to market the home aggressively and create mass exposure to attract more buyers.
Pricing your home when it first comes to market is imperative toward maximizing the return on your investment.