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Set
Your List Price
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During this phase of the home selling
process, Dennis will help you set your list price based on:
- Pricing considerations
- Comparable
sales
- Market conditions
- Offering incentives
- Estimating net proceeds
Pricing
considerations
In setting the list price for
your home, you should be aware of a buyer’s frame of mind. Consider the
following pricing factors: If you set the price too high, your house won’t be
picked for viewing, even though it may be much nicer than other homes on the
street. You may have told your REALTOR® to "Bring me any offer. Frankly,
I’d take less." But compared to other houses for sale, your home simply
looks too expensive to be considered. If you price too low, you'll short-change
yourself. Your house will sell promptly, yes, but you may make less on the sale
than if you had set a higher price and waited for a buyer who was willing to pay
it.
TIP: Never tell people what
you're "asking". It implies you don't expect to get that
much and will invite "low-ball offers".
Using comparable sales
No matter how
attractive and polished your house, buyers will be comparing its price with
everything else on the market. The best guide is a record of what the buyers
have paid in the
past few months for property in your neighborhood for properties similar to
yours. Your REALTOR®
can furnish data on sales figures for those "comps", and analyze them
for a suggested listing price. The decision about how much to ask, though, is
always yours.
The list of comparable sales a REALTOR®
brings to you, along with data about other houses in your neighborhood presently
on the market, is used for a "Comparative Market Analysis (CMA)." To
help in estimating a possible sales price for your house, the analysis will also
include data on nearby houses that failed to sell in the past few months, along
with their list prices. This CMA differs from a formal appraisal in several
ways. One major difference is that an appraisal will be based only on past
sales. In addition, an appraisal is done for a fee while the CMA is provided by
your REALTOR® and may include properties currently listed for sale and those
currently pending sale. In a normal home sale, a CMA is probably enough to let
you set a proper price.
A formal written appraisal (which may
cost a few hundred dollars) can be useful if you have unique property, if there
hasn't been much activity in your area recently, if co-owners disagree about
price, or if there is any other circumstance that makes it difficult to put a
value on your home.
TIP: If you do order a market value
appraisal, make it clear you don't need an elaborate, or full narrative report
-- the kind that's complete with photos of the house and neighborhood, a map
specifying the site, and floor plans is sufficient.
Consider market conditions
A Comparative Market Analysis (CMA) often includes Days on the Market
(DOM) for each comparable house sold. When real estate is booming and prices are
rising, houses may sell in a few days. Conversely, when the market slows down,
average DOM can run into many months. Your REALTOR® can tell you whether your
area is currently a buyer's market or a seller's market. In a seller's market,
you can price a bit beyond what you really expect, just to see what the reaction
will be. In a buyer's market, if you really need to sell promptly, offer an
attractive bargain price.
Offering incentives
Some sellers list at the
rock-bottom price they'd really take, because they hate bargaining. Others add
on thousands to the estimated market value "just to see what happens."
If you want to try that, and if you have the luxury of enough time to feel out
the market, sit down with Dennis and work out a schedule in advance. If
there haven't been many prospects viewing your home after three weeks, you may
need to lower your list price. If that doesn't bring any prospective buyers, you
may need to lower your list price again. Plan on doing that regularly until you
find a level that attracts buyers. Make a written schedule in advance, before
emotion takes over and you're tempted to dig your heels in.
Sometimes cash incentives are as
effective as lowering the price, especially in the lower price range where
buyers may be "cash poor." You may offer to pay some or all of a
buyer's closing costs and discount points required by the buyer's lending
institution. If you haven't had much traffic through your house and you’re in
a hurry to sell, you may want to add the offer of a bonus to the selling broker,
in addition to their commission. An example of the wording for such an offer may
be "to the broker who brings a successful offer before Christmas."
Estimating net
proceeds
Once you’ve been given an
estimate of market value by Dennis, you can get a rough idea of how much
cash you might walk away with when the sale is completed. This can be
particularly useful as you start looking for another home to buy. From the
estimated sales price, subtract:
- Payoff figure on your present
loan(s)
- Broker's commission
- Any prepayment penalty on your
mortgage
- Attorney's fees
- Unpaid property taxes
In North Carolina, local customs or rules dictate that the buyer
pays for
the following items, unless negotiated otherwise in the Offer to Purchase and
Contract.:
- Title insurance premium
- Transfer taxes
- Survey fees
- Inspections and repairs for
termites and the like
- Recording fees
- Homeowner Association transfer fees
and document preparation
- Home protection plan
- Flood Certificate
As far as closing costs are concerned,
you and your eventual buyer may agree on any arrangement that suits you, no
matter what local practice dictates. Dennis will assist you in
estimating what your final closing costs will be.
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color,
religion, sex, handicap, familial status, or national origin.”