Pricing Your Home it is all in the Numbers
There is no mystery in pricing your home for the real estate market, but it is the most critical aspect of selling your home for top dollar. A home that sells in 30-60 days is more likely to be sold for top dollar than a home that has languished on the market for 4-6 months and has had several price reductions. Careful consideration needs to be given to the asking price of your home.
Determining fair market value is the first step in creating a pricing strategy.
Fair Market Value is the price agreed upon and in
which the money and property exchange hands between a home buyer and
home seller. Fair Market Value is a price in which the general buying
public would be willing to pay. Both buyer and seller must be willing
and informed to buy/sell the piece of real estate in a arms length
transaction. A transaction where neither party is desperate to sell or
buy and where the property is given reasonable exposure to the open
market. more on fair market value
In a down market your list price should be slightly below fair market value. While in an accellerating market your home can be priced 3-5% over fair market value. If the market is flat, then you would price right at fair market value.
The basics of pricing boil down to the following criteria:
- Style of home- always try to compare a colonial to a colonial, or a cape to a cape....
- Square footage- square footage of comparable homes should be with in 10 to 15% above and below the square footage of the subject home.
- Room count/bedroom count/bathroom count- Your comparable properties should have the same number of rooms,bedrooms and bathrooms
- Year Built- The comparables should generally be close to being built in roughly the same year. You cannot compare a 1964 colonial to a colonial built in 2005.
- Functionality- The compared homes should have a similiar function. If your subject home has a cathedral ceiling family room on the first floor, than the comparables should also.
- Location- Preferably all comparables should be with in one mile of the subject property and be in similar locations, cul-de-sac to cul-de-sac, quiet side street to quiet side street and so on....
- Condition- Again you want to make sure your comparable properties are in similar condition to your subject property.
The above criteria is a generally quideline and cannot always be obtained. Once you start going outside of the criteria than adjustment will have to be made. Following is a summary of comparable properties.
These are actual comparables for Tewksbury Capes from about 8 months ago. Notice how the the average asking or sold price goes down from expired to active to sold as well as time on market. A square foot price is one way of looking at a price of a property....if you are too far extended from the average per square foot price you must ask yourself what makes you home different. Seller's remember your home is competing with other homes in the market place. Buyer's are more educated than ever before, they are not stupid... they know what your house is worth. For every buyer that comes through your home and does not buy, you must remember that most of those buyer's are going on to purchase another home with-in the next several months.
Pay close attention to the averages for comparable properties then determine is your price above or below average based upon square footage, room counts, style, yearbuilt, location and condition. Remove the emotions and study the numbers.