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For Sellers - Pricing Your Home

Price is a major factor in almost everything we buy or sell. Determining the correct price when it comes time to sell your home, or land, can have a major impact on timing and the financial outcome of the process. The old adage about "anything is worth only what someone will be willing to pay" is definitely true in real estate. I have experience and tools to help provide guidance and owners often have ideas that are firmly held but, at the end of the day, the market will have the final say on price.

The Comparative Market Analysis (CMA) provides guidance in determining where a property should be priced. The same process is used by lending institutions when appraising property. Many buyers who are represented by Real Estate Professionals will also be given information using this method. Although it is the best tool available, it is not a perfect indicator of what that special person will pay for your property.

Here is how it works. The prospective property is described in detail. Square footage, number of bedrooms and bathrooms, features such as family rooms, fireplaces, finished basements, central air conditioning, and garages are listed in a spreadsheet format. Three similar homes that have recently sold in the same area are selected. A comparison between the prospective home and each of the sold homes is made. Where there are differences a value is placed on that feature. The price the sold homes brought is adjusted by the sum of the differences between them and the prospective property. For example, if a home that sold has one bathroom and the prospective home has a bath and a half, add value to the sold home to reflect the price it would have brought if it were just like the prospective home.

The best CMA looks at properties that are exactly alike. Since this is a rare situation, judgments have to be made for each of the differences. The greater the number and extent of differences the more likely it is that error will enter into the analysis. The output of the analysis is a price range and an average price. I work with you, the owner, to use this information, to arrive at an asking price for the property. The owners timing and seasonal issues also factor into pricing. If a quick sale is important, generally a lower point in the price range should be chosen. If the owner has more time and the busy season is approaching, then start higher.

Owners should understand that price is the equalizer when it comes to features and location. Even a poorly maintained home with missing features will sell at the right price. By the same token, buyers do not always put the same value on features that sellers expect. In order to maximize the potential sale price, sellers should consult with a me to obtain tips about presentation. (see "Getting Your Home Ready" for more discussion about presentation)