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1 2 3 4 5 6 7 8 9 10 11 12 13         Previous Page      Next Page    Setting The Value--Pricing A House To Sell Along with location and condition, the pricing of a house is a major component of the reasons why a house will--or will not--sell quickly. Although the pricing should not be dealt with lightly, some sellers have a tendency to put too much emphasis on the price and not enough on the condition, ending up with a house that is overpriced for its current condition and the overall market. Even if you find an unaware buyer that appears willing to pay the high price, when the buyer applies for a mortgage, the chances are good that the lender's appraisal will force the price back down to market value.  Do not believe in the "greater fool" theory which is that a buyer will come trotting down the road and pay you more than fair market value. It's important to get it priced right the first time Care and time should be taken when establishing the original listing price for several reasons: 1) If the house is overpriced, it won't sell. If it doesn't sell and sits on the market the listing quickly becomes stale. 2) If you overprice the house with the intention of reducing the price later just to "see what the market will bear", when the price of the house is lowered, it signals to buyers that it was (and still may be) overpriced.  If it does not sell, reduce the price within the first month. 3) If the house is under priced, it most likely will sell quickly--to the detriment of your net proceeds. Some factors that affect the price 1) Location: You can't get away from this one. If your house is located in a desirable area that is in demand, you will be able to get a higher price than you can for the same house in a less desirable area. 2) Condition: A house that has been better maintained and shows better will always sell for more than one that has had deferred (neglected) maintenance and needs work. 3) Desirable amenities: If a house has amenities that are currently popular in the marketplace, it will bring a higher price. Methods of setting the price 1) CMA (Comparable Market Analysis): A comparison of similar properties in the same general area that compares actual sold prices. A Real Estate Agent can generate a CMA.  Some of the information you'll see includes address, sale date, price and square footage for up to 30 comparable properties.  2)    Appraisal:  An estimated valuation is placed specifically on your house by a professional appraiser. An appraisal will take into account location, condition and sale prices of comparable properties in the neighborhood. Appraisals If your plans are to use an Agent to sell your house, the easiest way of determining value is through a CMA (Comparable Market Analysis) which the Agent will develop for you. If you plan on selling your house on your own, and do not want to deal with Agents (who, in many cases will develop a CMA for you in the hope of getting your future business), the easiest way is to have a professional appraisal done on your home. Or, if you have a lot of time on your hands, and if Deed Recordings are publicly available and easily accessible in your locality, you can also search for all properties sold in the last year or so that are similar to your house. An appraisal is an opinion of worth of an item of value, whether it is a diamond, an automobile or your house. Depending on the size of your house and your location, a professional appraisal should cost somewhere in the $350 to $500 range. For your investment, you will get a complete analysis of the estimated value of your home. Factors such as condition, proximity to services, and overall neighborhood values all will all be taken into account. There are three general approaches to determining the value: the cost (or replacement) approach, the comparison approach, and the income approach. (Unless your property is commercial or a rental property, the income approach will not apply). In the cost/replacement approach, a determination is made as to what the cost would be to replace (rebuild) your home in today's market. In the comparison approach, the appraiser will, as in a CMA, determine what comparable properties have sold for in the last 6 months to a year. This approach will directly compare your house to these other properties, adding to value for special items that your house has, or deducting value for items that your house lacks (in relation to the comparables). In all likelihood, this comparison approach will give you the most accurate estimation of the worth of your house. Common Questions about Appraisals If I pay for an appraisal now, will the buyer be able to use it? A couple of factors will determine whether or not a buyer can take advantage of your appraisal. The most important lies with the policy of the lender which will be handling the buyer's financing. It is completely within the lender's rights (and more than likely) that they will want to order a new appraisal. In addition, there is the question of timeliness. If you have a professional appraisal done now and it takes more than six months to get a contract on your house, it is likely that the lender will require a more recent appraisal. Is the value locked in stone? Absolutely not. An appraisal, no matter how scientific, still ends up being the professional opinion of the appraiser. The appraiser must compare, for example, the condition of your house in relation to the comparable properties, which to some degree is a judgment call. Nevertheless, an appraisal will give you a reasonably good idea where your house fits in relation to recently sold properties. From that point you are well on your way to setting a fair price. Know what you  can and cannot change about your house. This information allows you to concentrate on those items that bring the highest rewards.   CAN CHANGE CAN'T CHANGE Exterior Condition Location      Interior Condition Style General appearance Size Nearly always ready to be shown; Proximity to shopping and services Advertising and Marketing Schools  Pricing to the market so that your house sells as quickly as possible. Neighbors The general Real Estate Market 1 2 3 4 5 6 7 8 9 10 11 12 13   Previous Page      Next Page

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