Pricing Your Home to Sell

Pricing your home correctly is critical to selling it, whether you sell it yourself or use a broker. In setting a sale price on your home, certain facts cannot be ignored. What you paid for a piece of property does not determine its current market value. Neighborhood development, zoning changes, the age of the property, and its condition are all factors. Maintenance items such as hot water heater, shingles, or furnace help maintain the value of your home. In contrast, capital improvements such as another bedroom, garage, or family room increase square footage and hence increase value.

When you price your home use the same process appraisers use to determine values for lending institutions. Begin by obtaining comparable sales information for your area. Next, find three to five homes that have approximately the same square footage and the same lot size as your home. Then, calculate the "price per square foot" just as the lender will do when the buyer obtains the loan. (To calculate the "price per square foot," divide the purchase price by the square footage of the improvements.) The highest price per square foot, is the maximum that you will probably be able to obtain given the current market conditions.

Six reasons why you should be realistically priced are provided below:

1. Your property must compete with properties now on the market. Buyers purchase by comparison so if your home is overpriced, it will not compare favorably with others on the market.

2. Overpricing is the primary cause of homes remaining unsold.

3. If you should happen to find a Buyer willing to pay more than the home is really worth, they will have great difficulty obtaining a mortgage because the mortgage company will not appraise the home for more than the market value.

4. The right price is of the utmost importance in the sale of any commodity. Homes priced right usually sell after a normal market exposure.

5. If you have purchased another home and your present home has not sold and is overpriced, you may suffer a substantial monetary loss due to the cost of taxes, insurance, maintenance, air conditioning, and mortgage interest, etc. while owning two homes.

6. Overpricing accomplishes nothing because most homes sell for their fair market value. The advantages of realistic pricing far outweigh any consideration to price a property more than 5% above this fair market value. An overpriced home does nothing more than help sell a home that is realistically priced.