Q: Iām about to put my home on the market. What factors should I consider when determining a listing price?
A: The ten main factors that influence the value of your home are:
1. Interest rates: The lower the interest rates, the more buyers can afford to pay.
2. Supply and demand: Are āfor saleā signs springing up all around the neighborhood? If there are a number of homes similar to yours on the market, consider them your competition. What can you do to set your home apart and make it potentially more desirable than the other listings? This will attract more buyers. On the other hand, a small number of homes for sale can result in competing bids that drive prices up.
3. Economy: Is the economy improving or sliding? This will affect buyersā confidence in their ability to manage debt.
4. Location: Are you in a desirable neighborhood, with key services such as schools, doctors, and shopping nearby? Are there factors that make your neighborhood less desirable, such as environmental issues or traffic problems?
5. Condition: Do you have an older home that needs updating to modern standards? Have you kept up with repairs? Is the house clean? Does your house make a good first impression? (This is called “curb appeal.”) How much can you reasonably do to fix it up and still get your fix-up investment back in the sale?
6. Timing: Do you need to sell quickly or can you wait for a better time in the market?
7. Size: Will your home appeal to a growing family or to those who are downsizing?
8. Amenities: Does it include features that are popular, such as low-maintenance landscaping or granite counter tops?
9. Terms: How flexible are you with respect to the sale? Whatās excluded? If you are downsizing and have substantial equity, have you considered offering financing? Carrying financing can make your home very appealing to someone who cannot get approved for a loan and also help you sell for the maximum price.
10. Attitude: How committed are you to selling now?
To determine your homeās value:
- Research the housing market in your area. Browse the Internet, local newspaper ads and free āFor Saleā publications. Visit open houses in your neighborhood to get a general idea of the current market.
- Get a comparative market analysis (CMA) from a REALTORĀ®. A CMA compares homes that are currently available and those that have sold in your neighborhood in the past year. The more similar the features — square footage, number of rooms, lot size, etc. — and the more recent the data, the more accurately it reflects the current market. Donāt confuse listing price with sold price — the most important factors in the CMA. REALTORsĀ® usually do CMAs for home sellers at no charge.
- Have your home appraised. An appraisal estimates your homeās market value. A lender will require an appraisal to finance a prospective buyer. For residential properties, a professional appraiser will either compare your home to similar properties that have sold in the area or, for new properties, estimate how much it would cost to replace the existing structure if it were destroyed.
To maximize your homeās value:
- Eliminate clutter and clean. The more you can clean your home and keep it tidy, the easier it will be to show, and more buyers will see it at its best.
- Paint and repair. First impressions count. Improve the appearance of your home with a coat of fresh paint. Take the time to fix any dripping taps, broken tiles or cracked widow panes.
- Consider hiring a home stager. A professional home stager can help you enhance the selling potential of your home by showing you how to arrange your home to appeal to buyers. Whether itās rearranging furniture, minimizing belongings, lending you accessories or renting furniture, they work with you to show off your homeās best features. Many will also coordinate hiring professionals to do cleaning, painting and minor repairs should you choose to do this.
Whatās the right price?
Generally, aim for your list price to be between 2.5 to 5 percent higher than what you expect the selling price to be. Pricing strategies vary with the market. If itās sluggish, price lower. If itās active, price close to your expected selling price to stimulate competing offers.
Remember, your home is easiest to sell when itās first listed. During the first couple of weeks, youāll get a flurry of interest on the part of agents eager to preview it for their clients. If you price it too high and they canāt sell it, your home may linger on the market and become old news. Prospective buyers may think youāre becoming desperate and lower their offers. As a result, you could end up having to accept less than you normally would have received.
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