With an ever changing market and a huge amount of money involved, setting a home sale price seems quite daunting. After all is said and done, the key to pricing involves supply and demand.
Sellers often set their price based on the amount they need to repay debts or purchase a new home. In reality, the price calculated this way has no relation to the property’s actual market value.
Sellers also compare their home to nearby homes to get a price, but personal bias gets in the way.
Most sellers invite three real estate agents, looking for three valuations on their property. They are, in reality, getting three pitches for business.
A reliable agent, with local area knowledge, will work with the sellers to determine a fair price, taking into account all the pertinent market forces.
It is your agent’s task to research and get familiar with the local market, as well as know the seller’s expectations, to set a reasonable price, with a cooperative seller and a cooperative buyer.
Vendors can also spend a few hundred dollars to get a sworn valuation from a reputable valuer. A basic valuation costs less than a building inspection.
Things to consider when setting the price:
When setting a sale price, there are several factors that need to be considered. What you need to do is get ready and do your research.
1. Check the listings in your area
Find out what is happening in your area, so you can get a good indication of the present market trends.
First thing is to check out the property listings in the same neighborhood as you. Pay attention to homes that have been listed over the past six months or so.
When looking at listings, compare the original listing prices with the final sale prices. This will provide you data on any price cuts and the supply and demand in the area.
2. Compare the same properties
Comparing a one-bedroom home when you live in a three-bedroom will serve no purpose. Focus on properties that are the same as yours. One good example is areas that compare in square footage within a 10% variance up and down.
3. Look at expired and withdrawn listings as well
Including expired and withdrawn listings in your considerations will give you a picture of what’s happening in the market.
This will give you information if any listing were pulled from the market and resisted and reveal any difference in listing sale prices. This should give you more understanding of what is happening and guide you with the appropriate sale price.
4. How to compute the value of your home
When all your research is done and have gathered all pertinent information, it is time to make your computation.
If, for example, you have found three or four comparable homes in your area, get the average to give you an idea of how much you can reasonably ask for your home.
At this point, it’s a good idea to seek guidance from experts – you might want to add or deduct 10% of this average to be competitive in the market and ensure a fast sale, or try your luck and target the highest possible price you can get.