Setting The Price Of Your Home To Sell

I think it is that time again to write about the topic of what you should be using to determine the price of  your home, and what kind of pricing options you have !! This is extremely important because the more homes that go onto the market, the more competition you will have, you want to make sure your listing stands out and gets sold before we have another sudden rush of new inventory ! 

How Real Estate Agents Determine The Value Of Your Home 

All real estate agents should be bringing a Comparative Market Analysis of your home when they come to meet with you to list your home.  Real Estate Agents use a similar system to what the banks will be using to determine your value these are the main characteristics in importance order that you will want to be using.  

• Homes within 1-2 miles of your home that recently sold within the past 90-120 days.
• Homes of the same style (EX: Ranch, Hi Ranch, Cape, Expanded Cape) or similar square footage if there is a lack of comparable style homes.  You can not compare your home to one of an opposite style just because you think your home is just as good, the bank won't allow it.  
• Rarely will you see homes with the exact same amount of bedrooms, baths, or even property size this is where you need to adjust the comps accordingly.
• Take a look at what homes are currently on the market, and compare how your home stacks up to theirs, these homes are your competition.  

In my opinion, if you meet with an agent and they do not bring with them a Comparative Market Analysis than they are not putting in very much effort to help you sell your home since determining the price of your home is really the very first step before listing it.  I always say my job is not to list your home, but to get your home sold ! 

The 3 Styles Of Pricing Your Home 

• Overpriced Home - This type of pricing is not only a waste of your agents time but yours as well.  You are putting yourself behind and unnecessary roadblock, and guaranteeing you will be having the dreaded price adjustment talk sooner than later.  Many homeowners will say "But I am flexible, just bring me an offer!" - There is only one problem with that, and it is that we can not relay that to all of those buyers who aren't a- looking at homes $20,000 above their budget or b- tell those buyers who are in that range that you are flexible.  Remember most buyers find their home online, so presentation including price is a very important factor and we can not write on your listings that you are willing to hear all offers ! 

• Market Priced Home - This is an educated homeowner who has taken the time, and hopefully the advice of their real estate agent and is priced in the same area of those comparable of the recently sold homes.  This kind of pricing will get you showings, and hopefully an offer within 6 months of being listed.  As other homes sell their might be a need to adjust the price of your home to stay in line with what homes went from contract to sold once you were listed.

• Action Priced Home -  Before I explain, let me say this action price does NOT mean pricing the home as if you were giving it away.  When you use this style of pricing you first base it on the comparable homes in the area that sold, but your focus is shifted to those homes that are currently on the market (those that are priced at market value, not of those that are overpriced).  You look at your direct competition and price it anywhere from $8000 - $10,000 below that of your best competition.   Normally on a market priced home once you have received an offer that $8000 - $10,000 is the wiggle room of where you would accept an offer.  What you do by pricing it that bit lower is your drive much more traffic and increase your chance of multiple offers, almost every home that is "action priced" will sell for either the listed price of the home, or possibly more because you have increased the buyers perception of value !   

There are a few things you will also want to keep in mind when you are thinking about where you want to price your home.  The most important questions you should be thinking of when determining the list price of your home are 

1. How much will you need to be able to walk away from your home after the mortgage payoff, brokerage fees, attorneys fees, title transfer fees. If after you total these things up if what you would need to list it for is significantly higher than what your home is worth it is always better to leave it off the market until your in a position to sell rather than have it listed and sit on the market making buyers wonder once wrong with it.  The exception to this is when you are avoiding foreclosure by doing a short sale.  
2. How quickly do you need or want to move ? If you want to move quickly than your best option is to really have your home priced at the "action priced" point so that you can move things along without any delay and a guaranteed end in sight ! 
3. How many times has your home been listed, if your home did not sell chances are it was overpriced which means at the very least you must get in-line with the current market value of your home.  Re-listing it at the inflated price again is working against yourself and buyers will begin to disregard your home because "there must be something wrong with it", and not even the best agent can overcome that ! 

If you are interested in having a Comparative Market Analysis done on your home, please contact me directly.  I will be writing another blog that goes into the specifics between things that will add value to your home verse things that are more features of your home, which can affect the overall listing price of your home in an upcoming blog ! 

                                                                                      

The TRUTH About What Your Home Is Worth!

Now almost every homeowner that has seen one the "Online Home Values" that are now being offered by Trulia, or Zillow call and express to me that their home is not only worth more than what it is/was listed for but it is even higher than that!

Let me just say this in the most simplest terms, they are WRONG! Yes I said it, and I am sure in some parts of the country perhaps their pricing is correct, but not here on the South Shore of Long Island.  Experts have done research and their values are actually off by around 20% and in some cases up to 50%! Now most people will than ask how can they do that, it is simple they put a disclaimer on their page and that's it. 

If you really want to know what your home is worth you need to make sure the information that the value it is being based on is accurate, and up to date! On many of these sites the value of your home is based upon the closed sales, under contract sales but they don't often reflect current sales.  Now here are the biggest problem with these sites.   Problem #1 if your neighbor or someone across town from you decides to over price their home that doesn't raise your value obviously, but according to these sites it does.  Problem #2, just because a house has the same number of bedrooms or baths it does not mean they are worth the same. This is where style of home does come into play, a Colonial style home is going to have much more square footage, than a Cape style home even if it does have the same amount of bedrooms.  Problem #3, we have no idea which of these formulas they are using when they calculated the value of YOUR home! Problem #4, they could never receive information as quickly as a Realtor can, computers are a wonderful tool in today's market but that will never replace hard work, and research by an actual person!

So how do you figure out what the value of your home actually is, well that is simple.  Call a Realtor!

They should be able to provide you with at least 3 comps for homes that sold within the last 180 days - with similar characteristics to your home (ex-square footage, rooms, bedrooms, baths, taxes).   This will be crucial information, prior sales are what the bank will be looking for.  When you are looking at these comps your should be sure to see how many days this home was on the market as well. 

They will also show your homes that went under contract with all the same characteristics that I previously mentioned.  This will show you about what price bracket you should be in when you price your home to get an offer.  This will be a great way to see how long homes in your area are for sale before they get an accepted offer!I personally believeit it is better to be at the top of a buyers price range, than at the lower end. 

Lastly they will show you homes that are on the market, again all the same characteristics and this is where you have the chance to judge your home from a buyers prospective.  From their prospective you want to make sure that your home shows value for that price range.  I do not mean price it below market value, just simply look from a buyers prospective and if your home is all original, and other homes on the market are updated you should make sure you adjust your price accordingly. 

This is the ONLY information that will give you the real value of your home, so take the time and speak with your Realtor regularly about your neighborhoods current market!