Pricing a
home is far trickier than you might think. Real estate professionals draw on
science, experience and talent, to arrive at the ideal price, one that leads to
a fast sale and nets the most proceeds for the seller.
Before
considering what factors influence price, let's look at the factors that don't:
You would never price a house based on what you paid for it-whether you
purchased it six months ago or 60 years ago. The price you paid has no bearing
on its current market value. Nor would you solely base the price on
improvements you've made. After all, that "improved" kitchen or
bathroom may not be to the buyers' taste. They may discount the price to allow
them to improve upon your improvements. And what you need to clear on the sale
has no bearing on the asking price either. Even the assessed value isn't always
a reliable plumb line.
So what
does influence price? Think of housing as a commodity that fluctuates according
to the universal law of supply and demand: many houses + few buyers = a drop in
value; many buyers + few houses = an increase in value. Then factor in the
terms, creative financing (for example, a low-rate assumable mortgage or
take-back financing), craftsmanship, amenities and condition. This brings us
closer to the true market value. A Realty Times article (Choosing the Best List
Price, August 25, 1998) describes pricing this way: "[Price] is determined
by the combination of the seller's unique home and situation and the buyer's
situation. In other words, the market is created house by house." That is,
what an individual buyer is willing to pay and what a seller is willing to
accept.
Where does
this leave you? Generally, the best indication of what you can get for your
house comes from comparing it with similar houses in the area that are
currently listed, in contract or have sold within the last six months. Evaluate
your home against homes with common features such as the number of bedrooms and
bathrooms, the lot and appeal of the location. Note the average list price,
average sales price, the percentage of listed homes that sell, the list to sales
price ratio and the average number of days on the market. A comparable market
analysis (CMA), prepared by your real estate professional, usually includes
this information. You may want to attend local open houses, solicit a
professional appraisal, and conduct research online as well. Broadening your
search for objective information will ultimately result in a figure closest to
the ideal.
Don't make
the mistake of overpricing. This strategy may backfire by resulting in
decreased activity, fewer offers, a lengthy marketing period, and lower net
proceeds. You might even make the competition look good.
By setting
a price that reflects market value, sellers can generally benefit from a faster
sale, increased interest from real estate professionals, greater exposure, and
a healthier return on advertising. In addition, you may even receive higher
offers that will net you more than you had anticipated!
Contact Chuck
so that he can perform a no cost Comparable Market Analysis for you. This CMA
will take in to account the recent comparable home sales in your area as well
as comparable homes for sale on the market in your area. A comprehensive CMA is
the best starting point for any Homeowner who is thinking of Selling their
home.
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