Tuesday, July 20, 2010

The importance of pricing your home right.

Of course when you go to sell your home, you want to get the most money for your property that is possible. There are a lot of things you can do to sell your home quicker and get more money for the home. However, if you want to sell your home and do so in a timely matter, pricing the house right is the most important thing that you must do.

How do you know how much your home is worth? That is a good question. When you decide to sell your home, there are several things you must look at to determine the market value of your home. You need to look at the size of the home, the number of bedrooms and bathrooms, the age of the home, the size of the lot and the general condition of the home. You also need to look at what amenities your home has. Does your home have amenities that are currently popular and desirable with buyers in today's market? Examples of amenities include screened-in porches, swimming pools, decks, a guest house, ect... You also need to analyze your marketing plan that you will have in place to sell your home. The more exposure your home gets to potential home buyers, the more likely it will seller quicker and for more money. Finally, you have to look the location of the property. If the property is in a location that is popular and more desirable, it will command a higher price. It could be argued that location is the single most important factor that determines the price of a home.

After you evaluate all of these variables, you need to start searching for comparable properties. First, you need to look at 3-5 comparable properties in the same neighborhood or in a nearby neighborhood that have sold within the last 6 months. If the market is very volatile and prices are quickly declining or increasing, you might want to reduce this time frame to the last 3 months. Looking at comparable properties that have recently sold will give you a very good indication as to what your home is worth. Next, you need to look at 3-5 comparable properties in the same neighborhood or simalar neighborhoods that are currently listed for sale. This will give you a good indication of what your competition is. If you are thinking of pricing your home at $200,000, but there is a simalar property in your neighborhood that is in the same condition for $180,000, who's property do you think is going to sell first? This brings me to my next point.

In a normal market, looking at properties that have recently sold is the most important thing you can do to determine the value of your home. However, in today's market it is equally if not more important to look at the comparable properties that are currently listed for sale. This is because prices are declining so fast. Prices are declining quickly because of the incredible number of foreclosed properties that are coming onto the market. Banks are selling properties at a discount because they want to get rid of them quickly, and it seems that banks keep reducing the prices of their properties regardless of what properties have recently sold for. If this is the case in the area where you are looking to sell your home, a sold comp suggesting a price $20,000 above what a foreclosure home in your neighborhood is currently listed for can be deceiving. If you want to compete with these bank-owned properties, you usually have to drop the price of your home or offer incentives such as paying closing costs. In today's market, you have to pay attention to what you are competing against not just what properties have sold for in the past.

Finally, you have to also look at 3-5 comparable properties that have expired because they sat on the market too long and did not sell. Usually these properties don't sell because they are overpriced, so it is good to look at these properties so you can know what prices are too high for you to list your property for sale at. My advice to you is to seek the help of a qualified REALTOR who lives and works in your area. They will be able to help you pull up and analyze these comparable properties to help you determine an appropriate price to list your home at.

Some people think that they should list the house above the price that the comparable properties suggest so they can have some room to negotiate. Some people also have the attitude that "I'll price the property higher, and if it does not sell I will lower the price later." This kind of thinking is not correct, and it will lead you to getting less money for your home. The greatest number of people are looking at your home withen the first few weeks you put your property up for sale. The more time that goes by, less and less people will pay attention to your home. This is what REALTORS refer to as "letting the listing go stale." If you overprice the property upfront, all those people that are looking at your property when you first list the property are going to disregard the property because it is overpriced. Later on, when you finally drop the price, less people are going to be looking at the property, so you will most likely have to drop the price of the property to less than you would have if you had just listed the property for what it was worth to begin with. Study after study has proven that homeowners net more money from the sale of their home if they price the property correctly from the time they first put the property on the market as opposed to starting high and dropping the price later on.

People often have emotional ties to their home, and because of this people often insist on pricing their home for more than it is worth. As a homeowner, you have to try to not let your emotions cloud the picture of what your home is truly worth. You have to analyze what kind of market you are in. If you are in buyers market, you are going to have to price your property competitively in order to stand out above your competition. In order to find out what is a competive price, you have to analyze the numbers from the comparable properties. From my experience, it has always been true that the numbers don't lie. If you price the property according to what the comparable properties suggest, your property will sell. A competant REALTOR should be able to help you price your property correctly.

If you have any questions, please don't hesitate to contact me at nahoom1171@yahoo.com or at (850) 567-0037.