Whether you're a FSBO or using a real estate agent, the single most important factor in the successful sale of your home is the price. Sure, location, amenities, and features all weigh in, but nothing is more critical to your deal than the price you put on your home.
Just think about it for a moment by imagining you're a buyer. Would you ever start a home search with no price range for what you can afford? Not likely. And no one does. Well, apart from the likes of Beyonce or Bill Gates.
You see, the price is always the constraining factor. Your home could be just awesome. You could have spent tens of thousands in the last few years improving it. It might have the nicest little breakfast nook just off the kitchen that's ever so comfy, but, at the end of the day, it's the price that will figure most into the decision-making, compare and contrast exercise that every single buyer does
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So how do you price your home for sale? Here are a few tips to get it right the first time and get it sold.
- Always price based on comparable homes - The majority of buyers need a mortgage. Mortgage companies only lend on the appraised value of a home. Appraisers use comparable home listings and homes that have sold to set value. That means, in the end, your buyer will usually only pay what they can borrow. If you don't stay true to your market competition, you will almost certainly end up with problems in your deal - and it may fall apart right at the end. Find out what your comparable home value is before you price.
- Leave the pride of ownership out of it - Everyone takes pride in improving their homes. Trouble is that usually translates into a skewed sense of what your home is worth when you go to sell. As hard as it is, you're only working against yourself if you don't try hard to check your emotions at the door and try to see your home as the widest range of buyers would see your home -as one of many to choose from with the same number of bedrooms, baths, same size and other similar features. That TV that hides itself in the floor at the push of a button? Cool, yes, but does it add value? Nope. A harsh truth: you NEVER get out of your home the money you put into it. In fact, a good rule is to expect to get back about 1/10th of each dollar you spend on improvements.
- Pay attention to your local market - It's a good idea to gather data on what your local market has done over the last 6 months and to look ahead to where current local economic, job market and other major indicators seem to be trending. Did a big plant just close down? A local college expand its enrollment? A new major shopping mall in development in your area? Things like this can affect what you can get at any given moment and how you should set your initial price. Pricing is dynamic and you must be prepared to abandon stubbornness adjust course.
- Check home inventory - How many homes comparable to yours are out there right now? How many have sold in the last 12 months? Home inventory (i.e. what there is to choose from) can affect how you price your home greatly. Not a lot of choice out there? Move up. Lots of choices on the market? Price it right to sell and balance your earnings with the speed of sale.
- Keep your real estate agent honest - Even if you've chosen your agent well, it's vital that you do a bit of work as stated above to come up with your own sense of where your home should be priced. Most home sellers become unhappy with their agents over pricing and how your deal unfolds as your home sits on the market. That's less likely to happen if you are a key player in the pricing process. If what your agent comes up with differs from your data, combine the information to make an informed decision. At the end of the day, you're the homeowner and only you must decide what price you set.
At the end of the day, here's a simple way to think about it all: any home deal is about balancing what you want most from two often indirectly related things, speed and value.
Do you need you home sold fast? Or can you afford to wait? Figure out which position you're in and that will help you come up with your best price for your circumstances. Get informed, study your market a bit and try to eave your prideful feelings out of it. Recipe for success.
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About the Author
Jason Polancich is founder and lead architect of HomePocket, a data-driven, residential real estate marketing and listing network. Polancich also founded SurfWatch Labs, a cyber data analytics firm founded in 2013 that provides highly accurate, timely and actionable information to businesses regarding the cybercrime threats they face. Polancich is a serial entrepreneur focused on solving complex internet security and cyber-defense problems. Novii Design, a company he co-founded in 2005 with Rebekah Lewis-Polancich, was based on his contributions to cloud architectures, distributed computing, data analysis and systems integration. The company assisted the U.S. Intelligence Community and Department of Defense in building some of the largest data warehouse and analysis systems ever put into operation within the government and defense contracting sectors. Novii Design was sold to Six3 Systems in 2010.Follow on Twitter More Content by Jason Polancich