How To Figure The Right Asking Price

ForSaleSign2HC1411_M_150_C_RDetermining the selling price of your home, most likely your single largest investment, can be tricky. There is no predetermined formula to give you the price a buyer is willing to pay, while at the same time giving you the largest possible profit. However, through diligent market research, you may be successful at reaching an optimum price.

The right price will attract the interest of buyers and real estate agents alike. It will also generate showings and offers which could produce a sale in record time.

Many factors influence a homebuyer when it comes to viewing houses. Location, neighborhood and the number of bedrooms are important. The most important factor, however, is price. The right price will determine who chooses to view your home and who doesn’t.

Most homeowners know it may take months to sell their home (average time is 90 days), but many don’t realize that from the time they put the “For-Sale” sign in the yard, most activity will take place within the next 15–20 days. This is the time that most serious buyers will walk through your door. People who have looked at all the available homes rush to see anything new on the market as soon as it appears. Homes that are priced right create a sense of urgency in prospective buyers. They know a house priced right won’t be on the market for long.

Let’s look at the most obvious mistakes homeowners make when pricing their home:

In an effort to get the highest possible price, homeowners often overprice their homes. Many try to compensate for improvements by raising the asking price to more than what the market will bear. For example, the addition of a 30-foot deck on the back of the house is a luxury item potential buyers may not want and may not be willing to pay extra for having. Generally speaking, homeowners only recoup a percentage of their remodeling costs. According to experts, the most profitable home improvements include moderate kitchen improvements and bathroom remodels. Homeowners may be able to recoup approximately 80% of a kitchen remodel project and slightly less for a bath remodel. Any other home improvements will reap a much lower return.

Another mistake homeowners often make is to intentionally start the selling process with a higher asking price than what is reasonable because they think it will give them room to negotiate. This is a false assumption. Most buyers will assume you’re looking for a full price offer or close to it. Consequently, most won’t bother making an offer. By pricing it right you’ll encourage full price offers.

Additionally a price that is too high will give the impression that you don’t really want to sell and serious buyers will pass you by, so will real estate agents who have a prospective client.

The correct price will draw buyers to your home. Once word gets out that your home is on the market and priced right, buyers will flock to your door and so will real estate agents. Some agents may have an interested buyer and ask if you’d be willing to do a one-time showing for a 2% commission. One-time showings are a great way to sell your home. Everyone comes out a winner—the seller, buyer and agent—so don’t hesitate to allow a one-time showing for an agent with a qualified buyer.

As the seller, there are no surefire ways to predict the optimum price, but there are steps you can take to help you get in the ballpark. Researching the market is key. By viewing similar homes in the neighborhood or surrounding area, you’ll be able to find a basic starting point. From there, increase or decrease the asking price of your home accordingly. Don’t hesitate to ask the owners of those other homes for sale how they arrived at their price. Their experiences can often lower your learning curve when arriving at the right price.

Before you arrive at a price, ask a local real estate agent to do a Comparative Market Analysis of your home. A Comparative Market Analysis utilizes data from recently sold homes in your area—homes with the same features as yours, such as the number of bedrooms/baths and square footage—to arrive at a price. Most agents are willing to help even if you plan to sell the home yourself in the hopes that you’ll remember them should you decide to list your home with a real estate agent. Be sure to get more than one analysis for comparison. If neither analysis comes close to the price you were thinking of asking, you may want to re-think your price. Many times, our expectations are higher than they should be, so be sure to do your own market research, too.

There is no surefire formula for pricing a home. It is a game of hit or miss. But through proper research and the advice of professionals who view hundreds of homes each year, you can arrive at an optimum price.

By Doris A. Black

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