Setting the Right Price for your Home
The price at which you list your home is determined by several factors including market trends, the condition of your home, it’s assessed value and a comparison with similar properties in your area. Setting the right price is crucial in ensuring that you get the return on your original investment.
Determining the market value
Comparing the square footage, lot size and overall amenities of your home to those that have already sold can help you gain some valuable insight into the true market value of your property. When calculating the market value, you should also account for the improvements made and the neighborhood. Consider how factors such as nearby schools and the proximity to desirable businesses or recreation areas might interest prospective buyers.
Risks of Over pricing
Buyers may pass up your home in favor of better values elsewhere if your home is over priced. Lenders tend to reject loans if the offer is more that the appraised value. If your house remains on the market too long, buyers may assume that there is something wrong with the property. This makes it more difficult to sell. You may end up having to drop your price to below that of comparable properties in order to sell.
Under Pricing
Setting the price too low may attract many buyers and lots of offers. But you would end up losing thousands of dollars when you sell. Buyers might also assume that the house has a number of flaws or is otherwise undesirable when the list price falls too far below the market value.
Estimating the Net Sale Amount
It’s important that you know exactly what amount you would walk away with. Before finalizing your selling price, ask your realtor to calculate what you can expect to realize from the sale after all the costs are deducted. Subtracting what is owed on your mortgage, closing costs, realtor’s fee, home warranties and other costs, you will arrive at the amount that you can expect to receive.
The right price is typically within 5% of the market value. And it usually results in a sale at a fair price within a reasonable amount of time.