Work with an Experienced Real Estate Agent
When you want to sell your home, you need to find an agent who is experienced and knowledgeable about your neighborhood. They will be able to give you advice on pricing based on your location and the demand for homes in that area. They will know how to promote your home and that includes pricing competitively. Don’t be afraid to talk to more than one agent until you find one you feel comfortable working with. While it’s a good idea to get references from your family and friends, do your own research as well.
What to Look at with the Competition
When you consider selling your home, one of the first things you should do is take a look at the competition – other homes currently on the market in your neighborhood and price range. You want to see how they stack up to your home and whether you should price higher or lower based on several factors. This research can help you sell your home faster.
You can read through the listings of other homes in your area, but it’s even better to visit the properties in person. You’ll learn valuable information that can help you price your own home correctly.
The following power point presentation gives you an idea of what you should look at when you check out the competition.
What is the “Soft Spot” in Real Estate and Why Does It Matter?
When agents talk about the soft spot, they are strategizing on how to price your home. The goal is to appeal to a specific group of buyers and to limit the competition. If you can find a soft spot for your home’s price, you have a better chance at selling quickly.
The Soft Spot
Also known as price banding, it means figuring out which price range has the fewest homes and including yours in that category. Prices tend to fit into a group, and you want to find the best group for your home. For example, one category might be $400,000 to $424,000 with four homes for sale while the next group of homes start at $450,000 to $475,000. If your home fits in between those two ranges at $425,000 to $449,000, you will want to price it in this price range so you won’t be competing against anyone else.
People search for homes based on a price range. They look at the maximum they can afford down to the minimum they would expect to pay for the kind of house they want. When you get the results of that search, the number of homes that show up will be your competition. If you can find a spot that has limited competitors, your home will stand out.
What You Should Understand about Comps
Comparables or comparative market analysis tells you a lot about how you should price your home and how quickly it will sell at the various price points. You should spend some time studying these reports before making a decision on pricing.
What You Learn
A comp report will tell you all the homes that sold in your area in the past three months. Historically, these reports went back six months, but with today’s market, three months is more relevant. They will include the list price or the price put on the home when it went on the market, the sales price, and the number of days the home was on the market. You’ll want to pay close attention to this information. A home that had a selling price much lower than the list price probably involved some negotiation by the buyer and seller, especially if the house had been on the market for some time.
A home that sells quickly for close to the list price was properly priced from the beginning. A home that is taken off the market only to be relisted for the same price may have had some repairs or updates to get the seller’s required price.
Tips for studying comps:
- Make sure the comparable homes are in close proximity of your home – within ½ mile or even closer in certain areas
- Ask for comps from more than one real estate agent if you haven’t chosen one – it will give you more insight. You don’t have to be working with an agent yet to get a list of comps.
Remember that comparative analysis is only one tool in pricing your home, but it plays a big part.
Other Factors to Consider When Pricing Your Home
While your competition and the condition of your home are two of the most important factors to consider when pricing your home to show and to sell, they are not the only factors to consider. You want to look at the entire picture to ensure you price your property competitively.
- Season – Spring is usually the best time of year to sell because people are looking for homes, but competition is not at its highest. On the other hand, you may command a higher price in the winter because fewer homes are on the market and buyers who are looking are serious about purchasing.
- Interest rates – Low interest rates will increase the number of buyers searching for a home, especially if rumors abound about higher rates coming.
- Inventory – More homes on the market drive the price down while fewer homes increase the price. Consider the inventory in your neighborhood and not just the number of listings in your city or region. You can ask your agent about inventory for your specific area.
It’s important to begin doing this research before you are ready to sell. An agent who has been in the business for a few years will have a good base for predicting what will happen in the next few months. They can advise you on the best time to sell as well as how to get the best price for your home.
Considering the Condition of Your Home When Pricing It to Sell
Most sellers don’t have a lot of control over the market and factors that tell them how much they can get for their homes. They are at the mercy of the economy. One area where you do have control is in the condition of your home. And this is one of the most significant factors in pricing it correctly.
Prime Condition
If your home has been renovated or is only a few years old and has been well-kept, you will get top dollar for it when you sell (assuming other factors are agreeable). This means fixtures and other design elements are not out of style and everything is in near-perfect working order.
Good Condition
A home in good condition is still a solid sale. You may notice a few items that look older and need freshened up, but nothing looks too dated or broken. You may even be able to put on a coat of paint or make a few minor repairs to increase the value, but you’ll get a good price even if you choose to do nothing.
Fair Condition, Needs Updating
A home that has good “bones” but is in need of updates will likely not bring top dollar. However, it should still command a good price because the renovations are only cosmetic. Buyers who are willing to put a few dollars in to make those changes will have a home that fits their tastes. Of course, if you choose to make those updates yourself, you can list at a higher price.
Poor Condition, Needs Major Work
A home that is in bad condition is one that needs more than a cosmetic facelift. It may need plumbing or electricity updated or even structural repairs, which can get expensive. Many buyers hesitate to purchase this kind of home even if they are willing to renovate because of the underlying problems they may find. A person interested in flipping houses will find this property appealing, but you can’t expect to get the best price. However, the work you would have to put into it to make it sell higher would negate any profit you could get.
When you work with a real estate agent, one of the first things they will do is assess the condition of your property. No matter which category your home fits in, they will probably have a few suggestions for improvement to get a higher price. Listen to their advice, know your own budget and capabilities, and consider how you can improve the condition of your home to get a higher price when it is time to sell it.