HOW
TO DETERMINE THE PRICE OF YOUR HOME
By Steven J. Tamburello
Why is it that some homes sit on
the market for a year while others sell like hot cakes? Frustrated sellers will blame a bad market,
while a good real estate professional will tell you that many times, a slow sale
is often attributed to the listing price.
If a home is overpriced, buyers
will stay away. But, if the price is
competitive with similar homes in the area and “shows” better than the
competition, it will have a better chance of being sold quickly.
The secret is perfecting a
technique that’s as American as apple pie: comparative shopping.
Although comparing houses with
different styles, square-footages and locations is challenging, real estate
professionals still feel it’s one of the best methods to use when determining a
home’s market value.
A responsible real estate agent
will effectively evaluate a home’s worth through a process known as Comparative
Marketing Analysis (CMA). Taking a look
at assets, such as a swimming pool, bigger than normal living spaces, a
fantastic view, adjacent city parks and other attractions, the agent will begin
to compare your home with similar properties, called “comparables,” that have
sold in the area within the last six months.
Typically, the agent is able to recommend a realistic price range that
will ensure you top dollar and a reasonably short time on the market.
However, factors such as the
amount of time needed to sell your home can alter the agent’s price
recommendation dramatically. Typically,
people should check with real estate offices in the community to determine the
typical duration that listings are on the market. Sales associates will explain that the
marketing “norms” vary with prices and properties. Based on this criteria, the agent feels
confident that he or she will be able to sell it for a price that both you and
the buyer will be happy with. However,
if you’re under time constraints because of unexpected job changes or moving
agreements you’ve made on another property, this will narrow your chances of
selling the home for top dollar in the market.
Assuming you have sufficient time
to market the home, here are a few small steps you and your agent can take to
finding the right price for your property.
The best comparisons can be made
with similar homes that have been sold within the last 45 days as opposed to
the standard six months. Any longer and
other factors, such as the economy, could cloud your view of how much your home
is really worth.
Another good benchmark is to
review the selling prices of homes that have just been sold and are pending
closes. Most MLS services provide
information on deals pending that most real estate agents should be able to shore
with you.
A good rule of thumb before
setting a price is to make 20 comparisons of comparable properties within a
one-mile radius of your house. Once
completed you can feel comfortable that the price you’ve picked is a good gauge
of the home’s worth and won’t discourage qualified buyers.
Being open and honest about what
you see as the home’s greatest strengths and biggest weaknesses will also help
an agent get a better feel for how to best evaluate (or assess) and market your
home. Think of your home as if you
were the buyer. If your home is listed
at the right price, you’re well on your way to a speedy and fruitful sale.
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