Arriving at the correct price for selling your home is the most important factor in whether your home sells quickly or languishes on the market. Overpricing tends to rob the home of its freshness after the first two or three weeks of showings, thereby reducing demand and interest after 21 days.
You will want to obtain a Comparative Market Analysis (CMA), so you are as close as possible to your home's value. No two real estate agents price property the same way. Most agents will prepare a CMA for you, but there is nothing from stopping you from doing one.
Here are a few things to know in preparing your own CMA.
1. Look for similar homes that have been listed in the same neighborhood as yours over the last six months. Homes should be limited to those within a 1/4-mile to 1/2-mile radius unless you live in a rural area.
2. Pay attention to neighborhood boundaries. Identical homes across the street from each other can vary as much as $100,000 due to physical barriers, major streets, freeways, or railroads. Also consider the age of homes you base your comparation. A home built in the 1960s will be different from one built in the 1990s.
3. Checkout sold comparisons. Compare the original price of the homes to the sale price to determine any reduction in price. Most property assessors' office will provide a list of sales.
4. Look for Withdrawn and Expired listings, Pending Sales and Active listings. Look for patterns as to why a home did not sell - perhaps the house was overpriced, not marketed properly or appearance of the property.
5. Compare square footage. Average square foot cost does not mean that you can simply multiply your square footage by that number, not unless you have the exact same square footage. Remember: The price per square foot rises as the size decreases and it decreases as the size increases. Larger homes have a similar square footage cost and smaller homes have a larger square footage cost.
6. Market-dependent pricing. Once you have collected all your data, it is time to analyze the data base on the market condition - a seller's market, buyer's market, or neutral market. Your sale price must allow for wiggle room in a buyer's market. The opposite is true in a seller's market where you might want to add 10% more to the last comparable sale. You may want to set your price at the last comparable in a neutral market, then adjust it for the market trend.
By spending a little extra time to research your current market condition and create your own comparative market analysis you can shorten the time your property is on the market and realize a significant profit on the sale.
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