Pricing is the foundation of a successful home sale. No matter what condition the home is in or where it’s located, both will be reflected in the sale price. Pricing a home can be a very emotionally-driven exercise: You may have very fond memories of your home and be inclined to over-estimate its worth. Or, you may be detached from the local housing market and not understand the gold mine you’re sitting on. Either position should be avoided. Buyers have always been very savvy, and with the advent of the internet, they have more tools to use now. But so do you! Below are some tips to help you find a range of your home’s value.
Most buyers will conduct an online home search using a range of prices. For example, they may select homes for sale in the range of $150,000 to $200,000. So, their budget is $200,000. If you want to list your home price at $205,000, it won’t show in this person’s search results, even though your home may eventually sell for $200,000 after negotiating, counteroffers, etc. So, pricing your home just above certain thresholds may yield fewer home buyers searching for your home. In this case, you may have better luck pricing it at $199,900. Use this principle on $25,000 thresholds for home up to $200,000. Some examples are:
Use $124,900, not $127,000
Use $174,500, not $176,500
For homes beyond the $200,000 range, use $50,000 thresholds:
Use $349,900, not $355,000
Use $799,000, not $803,000
In summary, don’t price your home just above $25,000 or $50,000 thresholds, but instead just under them.
Understand Your Market/Neighborhood
You should understand your neighborhood to help properly set your asking price. Ask yourself:
How are the schools and crime in my area compared to other areas in the city or county?
How does the size of my house compare with other homes nearby?
Is my area quickly accessible to restaurants, entertainment, shopping, transportation?
Try these websites:
What Separates My Home From Others Nearby?
Once you understand your neighborhood, now you need to see what separates your home from other homes in the area:
Am I the only with a gravel driveway?
Is my home the only one with siding?
Is my roof older or newer than most homes?
Is my home at the end of a cul-de-sac?
Is my home’s curb appeal (landscaping, tidiness, etc.) similar to others nearby?
Is my home a 1-story ranch, while most are 2-story colonials?
Is my lot much bigger than the others?
Is my home significantly smaller than the others?
Then assess any upgrades recently performed on your house. According to HGTV.com, typically roofs, siding, windows, and minor bathroom and kitchen upgrades will return at least 80% of the investment. But, certain things may prevent your home from selling quickly or at your asking price, so you may want to consider the improvement investment, especially if you’re a DIYer:
A roof that is unsightly,
Poor or no landscaping, relative to other nearby homes, or
Conditions that are unsafe, such as foundation problems or an inoperable HVAC system.
You don’t have to make these improvements, just realize that your asking price should reflect the condition of your home.
Determine the Square Footage of Your Home and Property
You will need to determine the square footage of your home and lot before your price it. This can be quickly done by consulting tax records or your recent property tax bill. If you can not locate your bill, call or visit your city or county property assessor’s office. But be careful, this information may not include a recent addition. The lot size will most likely be fairly accurate. When Home Sense advertises your home on a local MLS, it will indicate the source of home information and tax records are a relatively safe source. You may want to check Zillow.com or Trulia.com by entering your address in the home search. Reportedly, their information is obtained from tax records as well.
Finally, you may just want to measure things for yourself. For basements that are heated and cooled in the same manner as the rest of the home, its walls and floors are similar to the rest of the home, it has an entrance to the main floor, and has the same or nearly the same ceiling height as the rest of the home, about half of its square footage can be considered in the total home square footage. Try this method from HomeAdvisor.com. You may need a friend to help you.
Review Recent Sales Online
A REALTOR, like Home Sense, will provide sellers with a Comparable Market Analysis (CMA), which gathers recent sales information from the MLS to determine an estimated range of your home’s worth. It used to be that only REALTORS had access to recent sales data. But thanks to the internet, anyone can conduct a recent sales analysis. Try these websites:
When conducting a recent sales search:
Use about a ½ to 1 mile radius. If this yields too many results, try zooming in.
Note the date of sales and try to use only those sales that occurred in the last 6 months. If this yields too many results, use sales from the last 3 months.
Enter a square footage search filter value about 20% less than and 20% more than yours
Enter some other filters if you would like.
Ideally, you will have at least 3 properties that are similar to yours.
Total up all the sale prices and square footages of each sold home to get an average $/ square foot value.
Now apply this rate to your square footage, which should give you a starting point for your asking price.
For many of the recent sales, the expired listings will still have photos, so you should assess whether your home compares to these homes. Finally, go visit homes currently for sale, determine their $/square foot asking price, compare them to yours, and adjust your starting price accordingly.
Also, note how many days a comparative home took to sell. For slow sellers, you may conclude that the $/square foot was a little high.
Consider Having an Appraisal Done
Perhaps the most accurate and cost-effective way to determine your home’s worth is to hire a competent appraiser. For approximately $300 to $400, you will have a professional walk your property, compare it to others nearby, and provide either a number or range for your home’s worth. This will assure you that your asking price is fair. As a bonus, you can show the appraisal to all potential home buyers! If you want a quick sale, choose an asking price just under the appraisal (or at the low end) and if you’re willing to wait for the right buyer, choose an asking price equal or close to the appraisal value. For homes selling for more than $200,000, an appraisal is a very smart and small investment, relative to the home’s value.
Use the Federal Housing Finance Agency House Price Index Calculator
To help you determine a starting point for the asking price, try using the link below. This federal website gauges the value of your home based on the original purchase price and date, and uses average appreciation rates reported for your state or metropolitan area. If your home is in a metropolitan area, use the metropolitan area method (MSA/MSAD) rather than the state method to better assess its value.
When you arrive at an asking price, go visit other homes for sale in your area similar to your asking price and ask yourself, “Which would I like better? Mine or one of the others?” Or better yet, have a friend accompany you to offer an unbiased opinion. This will help ensure your price is in the right neighborhood.