Setting the list price for your home involves evaluating various market conditions and financial factors. During this phase of the home selling process, as your REALTOR®, we will help you set your list price by determining Pricing Considerations, Comparable Sales, Market Conditions and Estimating Net Proceeds.
In setting the list price for your home, you should be aware of a buyer’s frame of mind. Buyers will determine which houses they want to view, based on comparison with other homes that are on the market and those that have recently sold. Consider the following pricing factors:
If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than others on the buyers may be considering. You may have told your REALTOR® to “Bring me any offer, frankly, I’d take less.” But in that list of properties, yours simply looks too expensive to be considered.
If you sell the home before there has been market exposure, you may shortchange yourself by selling too low.
No matter how attractive and polished your property may be, buyers will be comparing its price with everything else on the market. Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood like yours.
Your REALTOR® can furnish data on sale figures for those “comps”, and analyze them for a suggested listing price. The decision about how much to ask, though, is always yours.
The list of comparable sales we will bring to you, along with data about other houses in your neighborhood presently on the market, is used for a “Comparative Market Analysis (CMA).” To help in estimating a possible sale price for your property, the analysis will also include data on comparable properties that failed to sell in the past few months, along with their list prices.
This CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. In addition, an appraisal is done for a fee while the CMA is provided by your REALTOR® and may include properties currently listed for sale and those currently pending sale.
In the normal real estate sale, a CMA is probably enough to let you set a proper price. A formal written appraisal (which may cost a several hundred dollars) can be useful if you have unique property, if there hasn’t been much activity in your area recently, if co-owners disagree about price, and any other circumstance that makes it difficult to put a value on your home.
TIP: If you do order a market value appraisal, make it clear you don’t need an elaborate or full narrative report–the kind that’s complete with photos of the house and neighborhood, a map specifying the site, and floor plans is sufficient.
A Comparative Market Analysis (CMA) often includes Days on the Market (DOM) for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run into many months.
We will tell you whether your area is currently a buyer’s market or a seller’s market. In a seller’s market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer’s market, if you really need to sell promptly, offer an attractive bargain price.
Once you’ve been given an estimate of market value by your REALTOR®, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful as you start looking for a replacement property.
From the estimated sales price, subtract:
- Payoff figure on your present loan(s)
- Broker’s commission
- Closing Costs
- Any prepayment penalty on your mortgage
- Attorney’s fees, if any
- Unpaid property taxes
In addition, you’ll be informed as to whether local customs or rules expects the buyer or seller to pay for the following items:
- Title insurance premium
- Transfer taxes
- Survey fees
- Documentary Stamps on the Deed
- Inspections and repairs for termites and the like
- Recording fees
- Homeowner Association transfer fees and document preparation
- Home protection plan
- Natural hazard disclosure report
As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates. Your REALTOR® will assist you in estimating what your final closing costs will be. It is difficult to predict what the exact closing costs will be when you negotiate with a particular buyer.