Subject:
How to Price Your House to Sell
Pricing a home is far trickier than you might think. Real estate professionals draw on science, experience and talent, to arrive at the ideal price, one that leads to a fast sale and nets the most proceeds for the seller.
Before considering what factors influence price, let's look at the factors that don't: You would never price a house based on what you paid for it-whether you purchased it six months ago or 60 years ago. The price you paid has no bearing on its current market value. Nor would you solely base the price on improvements you've made. After all, that "improved" kitchen or bathroom may not be to the buyers' taste. They may discount the price to allow them to improve upon your improvements. And what you need to clear on the sale has no bearing on the asking price either. Even the assessed value isn't always a reliable plumb line.
So what does influence price? Think of housing as a commodity that fluctuates according to the universal law of supply and demand: many houses + few buyers = a drop in value; many buyers + few houses = an increase in value. Then factor in the terms, creative financing (for example, a low-rate assumable mortgage or take-back financing), craftsmanship, amenities and condition. This brings us closer to the true market value. A Realty Times article (Choosing the Best List Price, August 25, 1998) describes pricing this way: "[Price] is determined by the combination of the seller's unique home and situation and the buyer's situation. In other words, the market is created house by house." That is, what an individual buyer is willing to pay and what a seller is willing to accept.
Where does this leave you? Generally, the best indication of what you can get for your house comes from comparing it with similar houses in the area that are currently listed, in contract or have sold within the last six months. Evaluate your home against homes with common features such as the number of bedrooms and bathrooms, the lot and appeal of the location. Note the average list price, average sales price, the percentage of listed homes that sell, the list to sales price ratio and the average number of days on the market. A comparable market analysis (CMA), prepared by your real estate professional, usually includes this information. You may want to attend local open houses, solicit a professional appraisal, and conduct research online as well. Broadening your search for objective information will ultimately result in a figure closest to the ideal.
Don't make the mistake of overpricing. This strategy may backfire by resulting in decreased activity, fewer offers, a lengthy marketing period, and lower net proceeds. You might even make the competition look good.
By setting a price that reflects market value, sellers can generally benefit from a faster sale, increased interest from real estate professionals, greater exposure, and a healthier return on advertising. In addition, you may even receive higher offers that will net you more than you had anticipated!
"Real Service in Real Estate." For a personal consultation on buying or selling real estate, Janis Peterson, GRI, Realtor® can be reached at (610) 642-3744, e-mail: jp4re@pahomes.com. Prudential Fox & Roach Realtors® is an independently owned and operated member of The Prudential Real Estate Affiliates, Inc.
