Determining the Price of Your Home
We've all seen the game show where contestants guess the
retail price of popular items. Now imagine a big-stakes contest
where you have to guess what a buyer will pay. Except this is
not a game; it's what potential home sellers face every day.
As a home seller, the biggest mistake you can make is to price
your house incorrectly. So how can you accurately determine
the price of your home?
Perhaps the best way is to excuse yourself as an arbiter. You
have a lot of emotional stock in your home, and unfortunately
emotional stock can't be traded on the market. Potential buyers
won't care that your son's handprint is in the sidewalk cement;
in fact, they might not like that at all. They won't care how
many banged-up thumbs you suffered during home repairs ...
or how you planned all winter for your garden. To get an
accurate assessment of your house's value, scrap the
emotions and look at your house as a buyer will.
The first thing to remember is that buyers are comparing your
home to other houses. You should do the same. An easy way
to do that is to ask several real estate agents to prepare a
Comparative Market Analysis (CMA) for your house. A CMA
compares similar and recently sold properties to see how well
your home stacks up in terms of square footage, location,
condition, acreage, and amenities. By seeing what comparable
houses sold for, you can get a better idea of what a buyer will
pay for yours.
Try to get at least three CMAs from different agents. And
beware of an agent who presents an inflated number. If two
come in at one price and another comes in high, chances are
the high number is more than hopeful. And it can be
devastating to list a house too high right off the bat.
Houses on the market generate the most interest within the
first 30 days of their listings. If a house gets overlooked
because it's overpriced during those first weeks, the listing
becomes stale if not tainted. Informed agents in the area will
have an idea of how much your house is worth; if they think an
appraisal won't support your asking price, they won't show it to
potential buyers. After all, it will be a waste of their time to
show houses that may have the sale fall through. And if you
overprice with the intention of coming down, you open the flood
gates to low-ball offers from buyers who will always assume
the house is still overpriced. So try to get it right the first time.
To get a better idea of how accurate the CMAs presented to
you are, do a little research yourself. Go to open houses. See
http://www.seacoastconnection.com/Sellers/Determining%20the%20Price%20of%20You... 11/19/2007
Determining the Price of Your Home
what the competition is offering in amenities and price. And
with a discerning eye and a logical mind, pay careful attention
to the biggest price drivers: location, condition, amenities, and
terms.
Favorable locations obviously bring better prices. Is your house
in a nicer neighborhood than others? Do you have a better
view? Or is your home uncomfortably close to busy train
tracks? Ask the hard questions and be brutally honest. When
comparing condition, check other houses' roofs, foundations,
carpeting, windows, and siding. How well does your home
compare?
And keep an ear to the overall market trends. Seller's markets
will generate bigger prices for your home than buyer's markets
will. Currently, most of New England (new Hampshire
especially) is still enjoying a relatively strong seller's market.
If you're a stickler for accuracy and like to take the guesswork
completely out of the process, consider having your home
appraised by a professional. After a thorough and in-person
inspection, a professional real estate appraiser will give you
the same sort of assessment a potential buyer will get. He or
she will inspect the foundation, roof, electrical and plumbing
systems, heating and air conditioning, windows, walls, and
other items and give you a detailed report along with an
estimated value. Real estate appraisers are certified in your
state and their evaluations are generally very reliable. What's
more, they're impartial.
What they are not, however, is free. Plan to spend $300 to
$400 for a professional appraisal. However, you do it, don't
take the pricing process lightly. A well-priced house will attract
more showings and will sell faster ... for more money and fewer
hassles to boot. And that will make everyone a winner in this
game.
