Determining the price at which to list your property for sale is the first and most important step when considering selling your home. Most buyers use price as the first factor that helps them determine which homes to look at as potential targets for purchase.
You want to maximize the amount of money you make when you sell but you also need to price your home at a level that makes it attractive to potential buyers and leads to a lot of buyer activity. If you set your price too high your home will be on the market much longer than you want while not attracting many potential buyers. Set your price too low and you are giving away money you could be putting towards your next home purchase or other dreams you may have.
Be Objective Not Emotional When Setting A Price
Of course you love your home that's why you bought it in the first place but you need to set your emotions aside when setting a sales price. Remember, this is a business transaction and potential buyers are not interested in how much love you feel for your home or the good memories you have generated there.
Potential buyers will be scrutinizing your home looking for negotiating leverage which they can use to lower their offer to you. You need to see your home through a buyers eyes and be critical when determining your sales price.
The important factors to consider are; your homes' location, current market conditions, your time constraints (have you already purchased your new home) and what is the lowest price you are willing to accept for your home.
Your Homes' Location
Is the neighborhood where your house is located in high demand? Areas that are in heavy demand tend to be more insulated from market conditions than others so it is important to objectively evaluate the desireability of the area where you live when setting your home sales price.
The gap between asking price and selling price is generally from 4% to 8% but in areas of high demand this gap shrinks considerably and can even disappear or reverse depending on whether it is currently a buyer's or seller's market.
Current Market Conditions
Is it a buyers or sellers market? What are the current mortgage and financing terms available from banks? What are overall conditions in your local economy?
Buyers will pay for your house what they believe it is worth at the time they are evaluating it. In order to price your home properly you need to do a comparison analysis of other similar homes in your area and see what they sold for recently.
You can get this information either by having a real estate agent access this information from the local MLS® system or if this option is not available you can hire a home appraiser to help you set your property price for a one time cost. You can also scour the local newspaper and online classifieds for sales in your area to help you get a full picture of the sales landscape.
If similar homes in your area are selling for $350, 000 to $360,000 you can expect your home to sell in this range as well. Being aware of comparables is the most important factor you should utilize when setting your sales price.
Your Time Constraints
Have you already purchased your next home and need to close the sale of your current home fast? Have you accepted a job in a new city and need to move by a particular date? It is always best to negotiate a sale when you do not have any pressure but life doesn't always allow for that to happen.
If you are under pressure to sell by a particular date you should consider selling your home at a price slightly lower than your ideal. If you have no pressures to move you can look to price your home at the upper end of the range you have in mind after doing your comparables analysis.
Your Lowest Acceptable Price
There are a number of costs to consider when closing a real estate transaction that have the potential to eat away at your perceived profit. When you sit down and really look at these costs it may change your opinion on whether you really want to sell at this point in time.
You may have prohibitive clauses in your mortgage that can eat away at your profit or maybe you have to pay commissions to the buyers agent who brought you your buyer depending on how you choose to sell your home.
If you are not under any pressure to move and you decide the money you will have in pocket after evaluating all of the closing costs on your transcation is not acceptable to you then you are better off waiting until market conditions are in your favor. Markets are cyclical and if it's currently a buyers market rest assured at some point in time in the near future it will be a sellers market.
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