Once you have decided to sell your home, you will probably have a ballpark idea of what you think your home is worth. This number is usually based on what you paid for it, the costs of upgrades you have added and what the neighbors' houses sold for. While your estimated number could be either right on the mark or wildly off base, your real estate agent will have the proper tools to help you determine a realistic asking price.
Often times, the price you have in mind is going to be higher than what your home could realistically sell for. Your real estate agent will prepare a CMA (Comparable Market Analysis) to determine the value of your home as compared to the other homes in your area. Consideration is given to factors such as the size of your home and upgrades you have made. However, depending on what the upgrades are, they may not add much to the value of your home. Costly upgrades such as a swimming pool may add little value to the home while a smaller kitchen renovation could more than pay for itself in added value. A realistic real estate agent will price your home so that it will sell in the market that exists in your area today.
If you meet with three different real estate agents, you will most likey receive three different estimates on the value of your home. The difference can vary greatly, even though each agent will have created a CMA for you. Some agents will tell you what you want to hear regardless of what the realities of the market are. They may pull comparable sold homes from out of your area and inflate the value of your upgrades just to obtain your listing. Many sellers are tempted to go with the agent who comes in with the highest listing price. This can often be a mistake as your home will sit on the market and get few showings and fewer, if any, offers. After all, the buyer's real estate agent is going to know the realities of your market and will advise their clients on which homes to view and what the comparable home sales are in your area. If your home sits on the market too long, potentional buyers may assume you are getting desperate, and you will start to receive lowball offers. By overpricing initially, you could end up settling on an offer of a lower price than you would have received if you had priced your home correcly the first time.
When your home is first listed, it is like the new kid in school. Everyone wants to meet the new kid. If you have priced your home right, it should be quite active with viewings. If you have over priced, fewer agents are going to have an interest in your home, as they know it would be a waste of their time. Once you drop your price at a later date, you are no longer the new kid on the block. Enthusiasm for your home will have dropped. It is often best to strike while the iron is hot! Even if you are successfully able to sell your home at a price higher than comparables in your neighborhood, your buyer most likely is going to need a mortgage. Morgage lenders will require an appraisal of your home compared to homes recently sold in your area. If the sales price and appraisal don't match up, it could cause you to drop the price to meet the appriasal or worse, for the sale to fall apart.
Another consideration to factor in is any personal property that is remaining with the house. Personal property is anything that is not physically attached to the home such as refrigerators, washers, dryers, etc. You will need to specify in the listing contract what items remain with the home and what does not. That family chandelier goes to the new buyer unless you specifically state that it is not included in the sale. Anything that is physically attached to the home should also be considered in the listing price.
When setting your price, be realistic. Take a look at the homes that have sold in your own neighborhood, preferably within the past 6 months. Take a look at the homes that are on the market in your neighborhood now. What are they asking and more importantly, how long have they been sitting on the market? A good real estate agent will not advise a price that is too high to make you happy, too low for a quick sale, but one that is based in the realities of your local market.
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