When you decide to list your home, determining the price is one of the most important decisions you will make. Pricing it too high may keep it on the market too long or encourage low-ball offers; underpricing it can cost you valuable profits, at best and generate suspicion about your home’s condition among prospective buyers, at worst. Since the market is driven as much by consumer optimism and emotion as by the numbers, the art of pricing your home to sell is part science and part intuition. Here are a few important variables to consider when figuring out a good list price.
Comparable Home Sales (“Comps”)
One of the first things a real estate agent looks at when pricing a home is a comparative market analysis, or CMA, which tells the agent what homes comparable to yours are selling for in your neighborhood. You can “eyeball” this yourself by doing some research online, but the CMA will provide the most accurate and up-to-date information you can get. Focus only on homes within ¼ to ½ mile of your home, listed within the past three months or so and preferably homes about the same age as yours. Also, focus on homes that have actually sold, not just listed homes; the sale price is the number you’re interested in, not the listed price.
Upgrades and Improvements
In helping you determine a list price, your agent will also take into account certain value-added improvements you’ve made — for example, updates to the kitchen, adding a bedroom or bathroom, etc. Improvements that boost a home’s appraisal value and/or perceived value will naturally allow you to price a bit higher without the home becoming stagnant on the market.
Condition of the Housing Market
A thriving housing market is typically good for sellers. If homes are selling quickly in your area or “bidding wars” are occurring, the market will likely support a higher list price, and you might even get more than you’re asking. If the market is in a dip or downturn, houses sell more slowly, which means a lower price will help you sell more quickly.
Current Inventory
Even in a good market climate, a glut of homes on the market can drive down prices. Take a look at how many homes are for sale in your neighborhood. If there are many “For Sale” signs, you may be competing with too many of your neighborhoods, which means you will have to price more competitively. If fewer homes are available, the scarcity can drive up the price a bit more. To get the most out of your home, if available inventory is high, your agent may advise you to wait a month or two to see if the number of available listings goes down so you do not have to compete as fiercely.
As you can see, pricing a home to sell requires some research and thought — and a bit of market knowledge and expertise can only help your cause. While the listing price is up to you as the seller, a knowledgeable agent can provide you up-to-the-minute data with recommendations as to a “sweet spot” for how to price your home. To learn more, call Atlanta Fine Homes Sotheby’s International Realty at 404.948.4812.