Pricing your home to sell can be an intimidating process: doing it right can make or break the sale of your house. You don’t want to miss out on obtaining the best possible price on your home, but you don’t want it to sit on the market either. Your real estate agent (if you are working with one) can stir you in the right direction, but at the end of the day, as the seller of the property, you have the last word on listing price. When comes the time to sell your home, here are a few things take into consideration when it comes to pricing.
- What do your competitors look like?
The first thing to consider when you are thinking about pricing your house to sell is to take a good look at the properties currently on the market that your home will be competing with. Comparables houses are the houses that:
- Are located within ½ mile of your property (unless you live in a rural community)
- Were built around the same time than your house
- Have roughly the same amenities than your house (the same number of bedrooms and bathrooms for example)
- Are about the same size than your house (within 10% of the square footage)
Those houses are the ones that a potential buyer who would be interested in your property would also investigate.
Have a look at how they compare within your house in terms of location (are they near a highway or a busy street for example), condition (were the bathrooms or the kitchen updated recently?) and additional features (do they have a bigger garage? A pool?).
If similar houses currently listed for sale are priced significantly below the market, foreclosures or short-sales for example, you might need to factor it in if you want your home to be priced competitively.
- How does your house compare to the houses that already sold?
Similarly, look at houses comparable to your own that have sold recently, ideally within the past three months: they are the best indicator of what a buyer is willing to pay for.
Investigate how long they were on the market before being sold, and how do their sale price compare to their listing price. Did they sit on the market for a long time before selling? Did the seller reduced the price several times before getting the house under contract, or on the contrary, did the house sell quickly above listing price? These are all indicative of what the market looks like.
- What about expired and withdrawn listings?
When you are planning to sell your house, it is always interesting to see which homes did not sell and why to avoid making the same mistake than your predecessors.
Were these houses overpriced for example? Were they listed again at a later date? Which brokerage or listing agent was listing these properties?
- What does the market look like overall?
Once you have a better idea about what houses around you are selling for, how long they are on the market, and if there is a significant difference between the listing and selling price, you will have a better idea whether you are in a buyers’ or sellers’ market. You can then price your house accordingly.
You will also need to take into account the seasonality of the market. In most parts of the country, spring is considered the best time to put your house on the market while winter can considerably slow down. Of course, some places are affected differently: for example, a beach town’s market peak will likely be in the summer.
- Put yourself in a potential’s buyer shoes.
Removing all emotional attachment to your house can be a strenuous exercise for some, but if you want to price your home to sell, you must think like a buyer. Accept the fact that it is unlikely that an outsider will be to pay for personalized details.
Keep an eye on your competitors when it comes to improving your property: for example, it is unlikely that a buyer for an entry-grade property would be willing to pay more for fancier (and costly) finishes, like marble countertops in the bathrooms.
It can be a good idea to go check out your competition in person during an open house to get a feel of what type of houses potential buyers will have seen before walking into your home and how your property will compare.
- Call on to the professionals.
Finally, if you are stuck, there are several ways to get a good idea of pricing.
Most real estate agents offer Comparative Market Analysis (CMA) for free as a marketing tool to attract new listings. However, in some cases, they might provide an overblown value to entice a potential client.
Real estate appraisers are impartial and will give you the best pricing estimate for your home. They can also give you some tips on which areas you might want to focus on to improve the value of your home. Although you will have to pay for their service, it can save you a lot of time and money in the long run.