When it comes to selling your home, the hardest part is often setting the price. It is one of the first things buyers will ask — what is the asking price?
If you ask too little, your profit goes out the window. If you ask for too much, you will have a hard time selling.
Last year, we sold our first home. We learned a lot of lessons. First, we guessed at our asking price. We didn’t even list the property. Someone knocked on our door, said he heard we wanted to sell and asked how much. After a week of back and forth, we dropped the price way, way too much, thinking he wouldn’t come up anyway. He did.
We knew then that we sold the property for too little. In fact, when the property was appraised, he said that the bank didn’t tell him how much it appraised for. The bank said that because he paid for the appraisal, only he could tell us the appraisal value. That verified that we sold the property for far less than it was really worth. We swallowed it, took our still quite hefty profit and chalked it up to a lesson learned.
When we sell our current house, we will do things differently. Selling your home is a rather large transaction. You want it to happen quickly and profitably.
One of the easiest ways to determine your home’s value is to have your property appraised. This usually costs around $300. The appraisal will include a comparison to the selling prices for similar properties in your area. While it does cost you money, you will have leverage in selling the home — a certified appraisal of what the home is worth before the purchase contract is signed.
In general, most real estate agents can provide you with a pretty close estimate of what your home is worth. After all, this is what they do for a living. They won’t overprice your home by too much because they want it to sell as quickly as possible. They won’t underprice it very much because that cuts into their commission.
Ask the realtor to provide you with a CMA (Comparative Market Analysis) on your property. The CMA is a comparison of the selling prices of homes similar to yours in your area. The CMA usually spans six months of real estate transactions.
You can go online and find several web sites that provide CMA services. The majority of online sites base your CMA on the local tax rolls. Some are free, but the vast majority ask you to provide both a payment for the service and your personal information.
Depending on the existing market in your area, you may need to adjust your asking price to sell your home quickly. If homes are remaining on the market up to 120 days in your area, you may need to lower your CMA by 2%. If homes are on the market for longer than 120 days, you may need to knock 3% off your asking price. Remember, you want your asking price to be high enough to make a profit, but low enough to sell in a reasonable time frame.
Keep in mind that a home can be accurately priced and still not sell quickly. It all depends on the market. Many sellers take less than the value of their property just to sell it and get it over with. Look at the market around you. Ask your realtor how long listings are remaining on the market. Base your decision to lower your asking price on the market, not on the buyer.