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Price The Competition

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Setting The Price of Your Home

Now that you have decided to sell your home, it is time to determine the list price. It is essential to list your home at the right price and it is important to get it right the first time. The pricing of a house is a major component in ensuring that your home sells quickly. Starting high and lowering it later may cause you to miss a buyer and will provide support to offer less at a later time. Price history is kept and is displayed via the MLS to the public. At the beginning of 2009 Sellers were pricing their homes above fair market value forcing Buyers to make offers that were tens of thousands of dollars less. No Buyer is willing to pay more than the fair market value of a home. Today, Sellers are pricing at market value and expect Buyers to make offers within a percentage or two of the asking price. Occasionally a Buyer will come along that is living in last years market who will make a ridicules low offer. In these situations we just say no.

There are several ways to determine the market value of your home, including an Automated Valuation Model, Comparable Market Analysis and Appraisal. An Automated Valuation Model is an electronic appraiser that provides a Homes Sales Valuation Report by entering your property address. A Comparable Market Analysis is generated by a Realtor, by comparing prices of similar properties in your area that have recently sold, are currently on-the-market, or were taken off the market unsold. An Appraisal is completed by a professional Appraiser specifically for your home and costs between $300-$400. After inspection, the Appraiser will determine the value of your home based on its condition, location and analysis of sold properties in your area. Because of the new federal appraisal laws, appraisers have to use properties that have sold in the last 90 days. If there are none, the appraiser will use older sales but will discount them which brings the value down. This in turn brings the value of your home down.

Tips for Setting the Price

In order to determine the market value of your home, you must objectively establish what someone else would pay for your house. This means setting aside your emotional attachment to the many wonderful memories you have shared in your home. Some things to consider when determining the price of your home: total square footage, floor plan, construction quality, condition, amenities, lot size, topography, view, landscaping and neighborhood.

Visit local open houses and compare the location, condition, size and amenities of these houses to your own as objectively as possible. If your house is located in a neighborhood that is in high demand, you will be able to get a higher price than you can for the same house in a less desirable area. A house that has been well-maintained will show better and, therefore, is likely to sell more quickly and for a higher price than one that needs work. When a house offers amenities that are currently popular in the marketplace, it will get a higher price. Most Buyers want a house that is move in ready and will pay a bit more to get it.

As your real estate agent, I can give you a full Comparable Market Analysis after examining what comparable homes have sold for in your neighborhood in the recent past. I also look at other homes currently for sale that will be direct competition for your home. Drawing upon my knowledge of other homes within the area, I will determine what I believe to be an approximate value of your home, we can use that information together to determine the final listing price. Getting the listing price right from the very beginning is the single most important step in getting your home sold.

Using homes from the Comparable Market Analysis, divide the list price by the total square footage. This will establish a baseline value per square foot of homes in your area. Multiply this number by the total square footage of your house and adjust based on amenities. This is one data point that can be used in conjunction with others to help identify an appropriate price for your home. This however is not a hard and fast rule. Square footage below street level is worth 40-50% less than square footage above street level. A one level home often has a higher value than a two story. A remodeled home is worth more than non-remodeled home. When looking at internet sites like Zillow, it's important to remember that they have no way of knowing what condition the home is in or what style it is. Therefore they currently have a 14% margin of error in the Portland Oregon market.

How is the economy? Interest rates? Local job market? What season is it? Homes tend to sell more quickly in the Spring and Summer months than in the Winter because people prefer to move during the longer warmer days and between school years. Are prices of homes in your neighborhood on the rise? Are they selling quickly? Check your Comparative Market Analysis to determine the days on the market for each comparable house sold. When real estate is booming, houses may sell in a few days. Ask your Realtor if it is a buyer’s or seller’s market. The Unsold Inventory Index, which indicates the pace of the market, is calculated by measuring how long it would take for all the homes currently on the market to be sold at the current rate of sales. A smaller index signifies a seller’s market, whereas a higher index suggests a buyer’s market. The ‘Price Discount’ is the percentage difference between the seller’s initial asking price and what the house actually sold for. A small percentage means the market favors sellers, while a large percentage signals a buyer's market. Most Buyers are willing to pay fair market value for a home they like.

Be creative and flexible in meeting the buyer’s needs. For example, offering a short escrow will attract buyers who want to move immediately. You might pay some of the buyer’s closing costs to seal the deal. Consider including appliances such as a refrigerator or washer and dryer. I recently had a Seller turn down a full price offer because the Buyer asked for the (used) washer and dryer. That house is still on the market months later, and I hope that Seller learned a valuable lesson. The longer a house is on the market the less likely you are to get a great offer.