Pricing And Selling Your Own Home

There are four major factors that define the parameters in selling your own home – price, location, condition, and amenities. Each one of these is important in their individual contexts, although none should be over-emphasized more than the rest.

In selling your house, one of the first steps is to set up an asking price. One should be careful in establishing the original listing price.

Overpricing

If the listing is overpriced, it will not sell. And if it does not sell, it will sit on the market listing for a period and will eventually become stale. If you overprice with intent to reduce the price later, the buyer might think that it may still be overpriced.

In case there is a buyer willing enough to pay the high price you set, chances are ripe that the lenders appraisal (when the buyer applies for a mortgage) will bring the set price back down to its prevailing market value.

Under-pricing, its opposite scheme, is obviously a straightforward losing proposition – it will cut into your proceeds.

Other factors

As to the other factors, location is a given and there is no escape from it. If your house is in a desirable area, it will simply command an automatic higher price than the house located in a less desirable area.

A house that is better-maintained and looks it is better-maintained can demand better money than the house that looks stuffy, cramped, and neglected.

The house with desirable amenities (pools, Jacuzzis) will bring a higher price than those without any.

Some price-setting methods

On the average, the asking price (the advertised price when your home goes on the market) is set slightly higher (around 1 to 3%) than the market value. While overpricing to some degree may be beneficial, one still has to be careful because there are still negotiations to be hurdled.

Have an agent make a CMA (comparative market analysis) of your home. This is an estimate of its fair market value, which can fluctuate depending on the market trends in your area and the number of similar houses (such as yours) sold out.

If you are in a hot sellers market (like in California and much of the West at this time of writing) you will have an advantage. At the other end, in a neutral or buyers market (like in Minneapolis these days), one has to be careful in setting a price.

There are also some questions that you can answer and can help in your decisions in setting the price when you will sell your own home: Which would you want, selling quickly or getting more money? Is your agents suggested price reasonable? If you were the buyer, would you be willing to pay that amount?