How much do you think your home is worth? It’s a good question to ask yourself, because its follow-up question is: how did you arrive at that value?
If you’re planning on listing your home anytime soon, pricing it correctly is essential to ensuring that it sells quickly. And it’s not just the buyer you’ll have to convince – it’s also the lender bankrolling the purchase. It might be tempting – particularly in a seller’s market – to set your asking price high and make a little extra money. But even if a buyer bites, he or she might not be able to secure financing if your home appraises for significantly less than the amount of the offer.
So, how do you determine the value of your home? The first person you should contact when you decide to put your house on the market is your real estate agent. You’ll need an objective resource to help you set your price, and your agent is just the person for the job. An agent with a good knowledge of your market will not only have experience setting asking prices, he or she will also have comparative recent sales (or “comps”) to use as a barometer of what your home is worth.
Comps are recent home sales in your area or neighborhood that are similar in terms of square footage, features and upgrades, age, and other factors. A survey of comps should give you a reasonable range in which to price your house. In a hot market, like now where inventory in many areas is low, you can set a price in the upper part of this range, while in a sluggish market, you might want to be a little more conservative about what you can reasonably hope to bring in. You don’t want your home languish on the market, accumulating days-on-market (DOM,) or even require a dreaded price reduction to entice buyers.
Your agent will also be able to take into account any features of your home that might increase or decrease its value when setting a price. Agents have experience that you don’t when it comes to what sells and what doesn’t. Sometimes those updates you’ve made along the way can pay off and you might set your asking price a little higher than a property that doesn’t have extra attic living space or a an updated kitchen and bathrooms. But maybe the hot tub you put in isn’t something every buyer would be interested in. Although there are likely certain things that you love about your house, it’s important to remember that what you appreciate about a home may not translate into what appeals to the average buyer. Your agent is an impartial expert about what sells and what doesn’t.
The good news is that right now, homes that hit the market in good condition and ready for sale – and that are priced properly – are selling fairly rapidly. Your agent will take the market conditions in your area into account when determining what should ask for it. By pricing your home correctly, you just might be in good position to make a quick sale. Good luck!
