When pricing your home, you may consider the price you originally paid, add a substantial markup and presume you’re done. This would be a grave mistake; one that could wind up costing you thousands or end in no sale at all. In order to price your home to sell there are many things that should be considered:
Get a CMA from a Thrive Realtor
When interviewing agents, you should obtain CMA’s from each agent offering an idea of the price your home should sell. A CMA details the prices of similar homes recently sold, on-the-market homes as well as homes that simply did not sell in your area. At Thrive, we run deep data analytics and then analyze those results with you in order to determine a pricing strategy that is compelling to buyers and comfortable for you.
Be wary of over-eager agents wanting to list your property. An agent practicing this technique will often sweet-talk you with their elevated price recommendation waiting only a few weeks to insist on a price reduction. Be mindful: a home on the market for extended periods become less saleable. People begin to wonder if there are significant defects with the property or whether the seller is in distress, both of which result in low ball offers.
Some agents suggest under pricing your home hoping to start bidding wars amongst hungry home buyers. While this technique may work to an extent in some markets, it is often a wiser decision to market your home at an appropriate price from day one.
Calculate the Price per Square Ft AND Price per Finished Square Ft
The average square feet of homes in your area can be considerable help in determining a proper listing price for your home. However, most people buy homes based on the amount of usable (ie. liveable) square footage. While above ground square footage is more valuable than below grade square footage, both data sets should be taken into account in order to price your home appropriately. But be sure you are comparing apples to apples – for example, make sure that you are not comparing above grade square footage to below grade square footage. This will establish a baseline value per square foot of homes in your area.
Evaluate Market Trends
How quickly are homes selling in your area? Are prices increasing or decreasing? Are you in prime selling season (typically during spring) or attempting to sell in the drooping winter season? How many offers are sellers typically receiving once on the market? These are only a few of many questions that your agent can help answer.
What Major or Minor Problems Exist Within Your Home?
If you’re in a sellers market you may not need to worry about fixing most problems in your house. Buyers are much more open to problematic homes when they are having a tough time finding one in the first place. However, if you’re in a buyers market it would be wise to fix as many problems in the house as you’re financial able to.
Either way, a home with problems will not generate as much value as a home in almost perfect condition (no home is perfect!). An advisable solution would be to evaluate the potential cost of repairs. Determine whether these costs could be recouped during the sale of your property. It is certainly worthwhile to consult your agent as well as other professionals for matters such as these.
Abandon Your Personal Bias
In order to determine the market value of your home, you must objectively establish what someone else would pay for your house.
This means setting aside your emotional attachment to the many wonderful memories you have shared in your home. Some things to consider when determining the price of your home: total square footage, floor plan, construction quality, condition, amenities, lot size, topography, view, landscaping, neighborhood, interest rates, comparable properties (be honest with yourself), and demand (ie. Absorption Rate).
Visit local open houses and compare the location, condition, size and amenities of these houses to your own as objectively as possible. If your house is located in a neighborhood that is highly in demand, you will be able to get a higher price than you can for the same house in a less desirable area. A house that has been well-maintained will show better and, therefore, is likely to sell more promptly and for a higher price than one that needs work. When a house offers amenities that are currently popular in the marketplace, it will invite a higher price.
A great way to get familiar with the market is by looking at what is for sale in your area. You can search Denver homes, condos, lofts, and townhomes here. In addition, be sure to use our Market Data page to read up on what is happening in the market – we track all the greater Denver real estate trends on a regular basis.
Study Market Conditions
How is the economy? Interest rates? Local job market? What season is it? Homes tend to sell more quickly in the Spring and Summer months than in the Winter because people prefer to move during the longer warmer days and between school years.
Are prices of homes in your neighborhood on the rise? Are they selling quickly? Check your Comparative Market Analysis to determine the Days on the Market for each comparable house sold. When real estate is booming, houses may sell in a few days.
Ask your Thrive Realtor about the Absorption Rate in your area. The absorption rate is calculated by measuring how long it would take for all the homes currently on the market to be sold at the current rate of sales. A smaller index signifies a seller’s market, whereas a higher index suggests a buyer’s market.
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