What’s The Right Price For Your Home?
Setting the right price for your home is critical. The value of your home is what a Buyer is willing to pay given current market conditions. Your goal should be to get the highest sales price in the shortest amount of time. Once you know that you want to sell your home it’s important to consider the following factors so you have the best information for setting the right list price.
Your Home’s Condition
Homebuyers want move-in ready homes. They’ll pay more money for one that’s updated and does not have any outstanding “projects.” Sellers are often concerned that the Buyers will want to choose their own colors, flooring, fixtures, etc. I have not found that to be the case. That’s why my services include a consultation with a talented stager & interior designer. Together, we work to ensure you make the improvements that result in a top-dollar sale in a short amount of time.
Take a critical inventory of the condition and age of your flooring, cabinetry, appliances, bathroom layouts and fixtures, wall colors or coverings, landscaping and curb appeal. Compare them with homes in your area that have recently sold and also those that are currently for sale. This comparison can guide both your pre-sale to-do list and the list price you set for your home.
Some Sellers prefer to sell their homes as-is and forgo the freshening process. I always advise them to be prepared for less market interest and a lower sales price because many buyers don’t have the money, time, or talent to make improvements when they buy a home.
When interest rates are favorable most Buyers are willing to pay a higher price for an updated house and have a slightly higher mortgage payment. For example, at a 4% interest rate, the payment on an additional $5,000 of mortgage balance is only $23.85 per month. Buyers who need to improve things after closing may not have $5,000 cash in the bank to take care of updates but can pay a small, additional monthly amount. Plus, most Buyers want to move in at closing – they don’t want to wait a few weeks to move in and/or live in a construction zone.
How Much Time You Have to Sell Your Home
Homes that are priced at market value will attract more Buyers and sell faster. If you decide to try an above-market price you’ll want to allocate more marketing time to secure a buyer. Sometimes there is a Buyer willing to pay an above-market price. Other times we need to lower the list price over a period of time. When a home has been on the market for a while, Buyers tend to negotiate more aggressively. They feel that the house must be less desirable since it has not sold, and therefore it doesn’t warrant a full-price offer. So Sellers can can end up selling for less money than if they had initially listed at the “right” price.
In fact, Sellers who need an immediate sale may want to consider pricing their homes below market to make it even more tempting to Buyers.
Take note of the purchase prices of homes that have recently closed in your area. Be sure you’re comparing apples to apples in terms of numbers of bedrooms, bathrooms, square footage, basement vs. crawl or slab, and neighborhood amenities.
I’m always available to provide clients with this information. Contact me here or give me a call so I can help.
Don’t Forget About Appraisals
Another important factor to consider when selling your home is that or less than 25% of homes are bought “all cash”. So the vast majority of Buyers will need to obtain a mortgage.
What does that mean for home sellers? When a lender is involved in the transaction, the lender conducts an appraisal of your property to ensure that the purchase price is not higher than a property’s current market value.
The appraiser will look at recent sales of similar homes within your subdivision, or within a 1-mile radius. The appraiser will use properties most similar to yours in that area that have sold in the past 6-12 months. I emphasize the word “sold” because current list prices are only considered as an indicator if neighborhood prices are not stable or going up. While this may surprise you, it makes sense. Any one can list a house for any price. But actual sold prices give appraisers the most accurate market value.This is important to lenders because they need to minimize their financial risk. If a home appraises for less than the contractual purchase price, the lender will lower the amount it is willing to lend a borrower-putting the home sale at risk.
I’d love to bring my experience and trained eye to your sale process. Contact me here so we can get the research and sale process started.
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