Set Your List Price
Setting
the list price for your home involves evaluating various market conditions and
financial factors.
During this phase of the
home selling process, your REALTOR® will help you set your list price based on:
Pricing considerations
In setting the list
price for your home, you should be aware of a buyer’s frame of mind. Consider
the following pricing factors: If you set the price too high, your house won’t
be picked for viewing, even though it may be much nicer than other homes on the
street. You may have told your REALTOR® to "Bring me any offer. Frankly,
I’d take less." But compared to other houses for sale, your home simply
looks too expensive to be considered. If you price too low, you'll short-change
yourself. Your house will sell promptly, yes, but you may make less on the sale
than if you had set a higher price and waited for a buyer who was willing to
pay it.
TIP: Never say
"asking" price, which implies you don't expect to get it.
Using comparable sales
No matter how
attractive and polished your house, buyers will be comparing its price with
everything else on the market. Your
best guide is a record of what the buying public has been willing to pay in the
past few months for property in your neighborhood like yours. Your REALTOR®
can furnish data on sales figures for those "comps", and analyze them
for a suggested listing price. The decision about how much to ask, though, is
always yours.
The list of comparable sales
a REALTOR® brings to you, along with data about other houses in your
neighborhood presently on the market, is used for a "Comparative Market
Analysis (CMA)." To help in estimating a possible sales price for your
house, the analysis will also include data on nearby houses that failed to sell
in the past few months, along with their list prices. This CMA differs from a
formal appraisal in several ways. One major difference is that an appraisal
will be based only on past sales. In addition, an appraisal is done for a fee
while the CMA is provided by your REALTOR® and may include properties currently
listed for sale and those currently pending sale. In a normal home sale, a CMA
is probably enough to let you set a proper price.
A formal written appraisal
(which may cost a few hundred dollars) can be useful if you have unique
property, if there hasn't been much activity in your area recently, if
co-owners disagree about price, or if there is any other circumstance that
makes it difficult to put a value on your home.
TIP: If you do order a
market value appraisal, make it clear you don't need an elaborate, or full
narrative report -- the kind that's complete with photos of the house and
neighborhood, a map specifying the site, and floor plans is sufficient.
Consider market
conditions
A Comparative
Market Analysis (CMA) often includes Days on the Market (DOM) for each
comparable house sold. When real estate is booming and prices are rising,
houses may sell in a few days. Conversely, when the market slows down, average
DOM can run into many months. Your REALTOR® can tell you whether your area is
currently a buyer's market or a seller's market. In a seller's market, you can
price a bit beyond what you really expect, just to see what the reaction will
be. In a buyer's market, if you really need to sell promptly, offer an
attractive bargain price.
Offering incentives
Some sellers list
at the rock-bottom price they'd really take, because they hate bargaining.
Others add on thousands to the estimated market value "just to see what
happens." If you want to try that, and if you have the luxury of enough
time to feel out the market, sit down with your REALTOR® and work out a
schedule in advance. If there haven't been many prospects viewing your home
after three weeks, you may need to lower your list price. If that doesn't bring
any prospective buyers, you may need to lower your list price again. Plan on
doing that regularly until you find a level that attracts buyers. Make a
written schedule in advance, before emotion takes over and you're tempted to
dig your heels in.
Sometimes cash incentives
are as effective as lowering the price, especially in the lower price range
where buyers may be "cash poor." You may offer to pay some or all of
a buyer's closing costs and discount points required by the buyer's lending
institution. If you haven't had much traffic through your house and you’re in a
hurry to sell, you may want to add the offer of a bonus to the selling broker,
in addition to their commission. An example of the wording for such an offer
may be "to the broker who brings a successful offer before
Christmas."
Estimating net proceeds
Once you’ve been
given an estimate of market value by your REALTOR®, you can get a rough idea of
how much cash you might walk away with when the sale is completed. This can be
particularly useful as you start looking for another home to buy. From the
estimated sales price, subtract:
In addition, your REALTOR®
can tell you whether local customs or rules dictate that the buyer or seller to
pay for the following items:
As far as closing costs are
concerned, you and your eventual buyer may agree on any arrangement that suits
you, no matter what local practice dictates. Your REALTOR® will assist you in
estimating what your final closing costs will be.
Information gathered from
http://www.realtor.com/Basics/Sell/SetPrice/ListPrice.asp?gate=iwn.