Setting The Selling Price Of Your Home
Setting the selling price of your home can seem like a complicated process fraught with pitfalls and fears of either pricing it too high and getting no offers or pricing it too low and leaving money on the table. Sometimes pricing is determined for other reasons such as a negotiating tactic to make it seem you're doing the buyer a favor by dropping the price by $5,000 or pricing it to move if you are relocating for a job or getting a divorce. Even in the most drastic circumstances it is important to understand how to set the selling price in order to get the most value for your home.
Pricing a home is not done in a vacuum and takes into consideration many factors such as how much other homes in the surrounding area have recently sold for as well as the quality of your home in relation to those properties sold. If you have paid for significant upgrades or remodeling then you would be able to demand a price premium relative to the competition. Just be sure not to price it too high because regardless of the upgrades certain neighborhoods target certain buyers and you could price yourself out of the market. Many first-time home buyers move into entry-level neighborhoods which result in lower prices due to the search of lower monthly payments. It is important to know your target market and understand the limitations of potential buyers depending on where your home is located.
Another part in setting the selling price of your home is determining your time horizon for the sale. If you have enough cash reserves or income available to leave the home on the market for 6 to 12 months then you may be able to initially price the home higher than surrounding residences in the hope of commanding a higher sale price. Even if the home doesn't sell in a timely manner by pricing it higher you can always advertise a $5,000 or $10,000 price drop to use in marketing materials and help motivate potential buyers. Economic conditions such as current mortgage interest rates as well as loan availability will determine your potential pool of buyers and will need to be considered if pricing your property on the high-end.
Even after taking into account what other properties sold for and valuing your home based off of perceived market value you still may not be confident in setting a selling price. At this point it may be beneficial to enlist the services of a trained professional like a licensed realtor and appraiser. An appraiser is important because they take a more objective approach to evaluating a property and can provide a base price of what the property would fetch if a buyer is financing with the mortgage. This can provide the home seller a pricing floor as the appraised value is a more fundamental basis of what the property is worth. A licensed real estate professional can also provide insights into the market value of your home which can be used in conjunction with the appraised value. The market value takes into consideration various factors like current housing inventories, if it is a buyer or sellers market and whether or not it can command a price premium. A realtor with years of experience will be able to work with you in obtaining the price you want for your home and will set a selling price accordingly.
Setting the selling price of your home is not necessarily complicated but does take effort to collect various pieces of information from multiple sources to build a picture of what a home is worth. At the end of the day a home's value is solely determined by what a buyer is willing to pay. With sufficient research and input from licensed professionals, setting the selling price of your home will become much more streamlined and simplified allowing you to maximize returns and minimize any potential loss.
