Setting the Price on Your Home

Along with location and condition, the pricing of a house is a major component of the reasons why a house will - or will not - sell quickly. Although the pricing should not be dealt with lightly, some sellers have a tendency to put too much emphasis on the price and not enough on the condition, ending up with a house that is overpriced for its current condition and the overall market. Even if you find an unaware buyer that appears willing to pay the high price, when the buyer applies for a mortgage, the chances are good that the lender's appraisal will force the price back down to market value.

It's important to get it right the first time

Care and time should be taken when establishing the original listing price for several reasons:

• If the house is overpriced, it won't sell. If it doesn't sell and sits on the market the listing quickly becomes stale.
• If you overprice the house with the intention of reducing the price later just to "see what the market will bear", when the price of the house is lowered, it signals to buyers that it was (and still may be) overpriced.
• If the house is underpriced, it most likely will sell quickly--to the detriment of your net proceeds.

Some factors that affect the price of a home

• Location: You can't get away from this one. If your house is located in a desirable area that is in demand, you will be able to get a higher price than you can for the same house in a less desirable area.
• Condition: A house that has been better maintained and shows better will always sell for more than one that has had deferred (neglected) maintenance and needs work.
• Desirable amenities: If a house has amenities that are currently popular in the marketplace, it will bring a higher price.

Methods of setting the price

CMA (Comparable Market Analysis): A comparison of similar properties in the same general area that compares actual sold prices. Fill out the CMA on this web site for your complimentary market analysis.

A CMA will show exactly what properties that are similar to your house have sold for within a recent time frame. These analyses are based on fact, rather than opinion, and that information will always be of more value to you. Generally, CMAs will list houses in a particular location that are currently on the market, have sales pending on them, have expired from the market, and have sold. Be forewarned: it is primarily the SOLD properties that you need to be concerned with. What houses are listed for on the market is not always a good indication of what their value is, those that have pending sales will only tell you what the listing price is (not what it is going to sell for), and those that have expired because they haven't sold may indicate that they didn't move because they were overpriced.

As a part of my listing presentation, I will develop and share a CMA with you. In addition, I may be able to add some insight beyond just the numbers on the CMA sheet. For example, the CMA may show that the average sold price in the last year for houses similar to yours is $330,000, but the average of the houses sold in the last 2 months is $334,000, indicating an increase in market value.

The CMA will most likely give you some general information about the houses that will be compared: Number of bedrooms and baths, square footage, the listing price and the sold price. It is important that the CMA focuses on houses similar to yours. If your house is a 4 bedroom, 2 1/2 bath 2 story, a CMA that lists only 3 bedroom 1 bath homes is of little or no value. Likewise, a CMA that includes a number of properties from a neighborhood 2 miles away will have limited value. To have a good CMA you must have all of the similar sales in the neighborhood in the last year. Obviously, the fresher the data (the more houses sold in the last few months), the better the CMA.

Appraisal: A estimated valuation is placed specifically on your house by a professional appraiser. An appraisal will take into account location, condition and sale prices of comparable properties in the neighborhood.