Pricing Your Home for Top Dollar Understanding the market and pricing your home to sell is by far the most important, and most misunderstood step in the process. Improperly pricing your home is the single biggest factor that will cause it to NOT SELL and sit unsold for months on end! It is natural for every homeowner to have a certain “pride of ownership”, but you must be objective and try to take your emotional attachment to your home out of the situation. If you price your home too high IT WILL NOT SELL!! It will sit on the market for months on end, getting the reputation of a “problem property”. People will assume that since the home has not sold, there must be something wrong with it. They will start to avoid it like the plague! Even if you then drop the price, the damage is already done… the stigma is there, and you may need to drop the price even further to entice skeptical buyers. DO NOT FALL INTO THIS TRAP! To make sure that this doesn’t happen to you, you must focus on two main areas: CURRENT MARKET CONDITIONS YOUR TIME REQUIREMENTS Let’s look at how current market conditions can effect selling and pricing. Suppose that there were very few homes on the market for sale, and a large amount of eager buyers. What would that do to prices? That’s right, they would go up. This is referred to as a seller’s market. Conversely, if there were very few buyers and lots of eager sellers, what would that do to prices? Sure, they would go down. That would be a buyer’s market. This is the basic law of supply and demand. Of course, you must also consider things like interest rates, new home sales, and local economic factors such as large businesses opening or closing, etc. To properly analyze your current market conditions, you will need to research homes currently available, under contract, and recently sold in your area. Start by taking a brief look at the homes that are currently available for sale. The purpose of looking at the homes available is to get a feel for what other people in your area are asking, NOT to base your price on. A seller can ask any price for their home, regardless of what it is really worth. Many of the available homes are priced in “dreamland”. These prices DO NOT reflect the realities of the market. In fact, professional appraisers can not use available prices at all when appraising a house, only closed sales within the past six months. Now move on to the pending and closed sales. This is the real bottom line, where the “rubber meets the road”. It is the hard reality - what buyer’s were willing to pay and what seller’s were willing to sell for in a free, open market. Next, study the Closed Sales. The first thing you may discover is that the actual sales price of the neighbor’s home that sold 2 months ago is less than what they told you when you saw them out in the driveway. Imagine that! There are several ways to get information on homes that have sold. The first way is to do the research yourself. The sales prices of homes that have sold and closed is public record, so you can go to your county or city records office and dig for all of the information. I don’t know exactly how long it would take, but don’t make any other plans that day! Many title companies will provide you with data on sold homes. Most will do this for free, to entice you to use them for your title insurance policy. To get the most complete information, give me a call. With the click of a few buttons on my computer, I can have a complete computerized market analysis of your area (including available, under contract, and closed homes, average price per square foot, average days on market, etc.) printed out in a matter of minutes. I will be happy to bring it over for you, with absolutely no obligation, sales pitch, or pressure to list. Once you have the market information on homes in your area, take some time and drive around the area, stopping in front of the homes on your list. Make notes about the exterior appearance and other details of the homes. This is an important step, because it gets you more familiar with the market, and will help you make a more objective decision on pricing your home. If any of the available homes are having an open house, take a look inside. Be up front with the owner or agent, and tell them, “We live in the area and are planning to sell our home ourselves. Do you mind if we take a quick look?” Next, sit down at the table and review the data and make honest, unbiased comparisons based on criteria such as: SIZE AGE BEDROOMS BATHS BASEMENT GARAGE VIEW LOT SIZE OTHER FEATURES AND UPGRADES Identify the homes that are similar to yours in size, style, etc. Then look for items that are different like a remodeled kitchen, pool, finished basement, etc. and make adjustments. For example, let’s say that there are 4 homes like yours that have recently sold, priced at $166,500, $169,900,$179,000, and $183,900. The home at $183,900 has some extra features that yours doesn’t, but yours is superior to the one that sold for $166,500. Overall, the two other homes are pretty close to yours. This gives you a current price range of $169,900 to $179,000. Now all you have to do is pick a price within this range! DO NOT make the mistake of thinking that maintenance items can be considered improvements that increase value. Things such as a new roof or new heating/cooling unit are maintenance items, not improvements. While having these items up to date may make your home sell faster, they typically do not add much to the potential asking price of the home. After all, a buyer will expect a home to have a roof that doesn’t leak and a properly functioning heating/cooling unit. Once you determine the proper price range for your home, your own time requirements come into play. How quickly you want to sell will dictate whether you price at the lower or higher end of the price range. It is easy to see that if you needed to sell your home within 4 weeks, you would have to price it lower than if you want to sell within 4 months. If you are still having difficulty determining the proper price for your home, you can call me for assistance (no obligation, of course), or hire a fee appraiser which you can find listed in the phone book. Improper pricing is the single biggest mistake that sellers make. Don’t let this happen to you. Make sure that you set a reasonable price for your home right from the start.