How to Figure the Right Asking Price
Determining the selling price of your home, most likely your single largest investment, can be tricky. There is no predetermined formula to give you the price a buyer is willing to pay, while at the same time giving you the largest possible profit. However, through diligent market research, you may be successful at reaching an optimum price.
Many factors influence a homebuyer when it comes to viewing houses. Location, neighborhood and the number of bedrooms are important. The most important factor, however, is price. The right price will determine who chooses to view your home and who doesn't.&
Most homeowners know it may take months to sell their home (average time is 90 days), but many don’t realize that from the time they put the For Sale sign in the yard, most activity will take place within the next 15-20 days. This is the time that most serious buyers will walk through your door. People who have looked at all the available homes rush to see anything new on the market as soon as it appears. They know a house priced right won't be on the market for long.
In an effort to get the highest possible price, homeowners often overprice their homes. Many try to compensate for improvements by raising the asking price to more than what the market will bear. Generally speaking, homeowners only recoup a percentage of their remodeling costs. According to experts, homeowners may be able to recoup approximately 80% of a kitchen remodel project and slightly less for a bath remodel. Any other home improvements will reap a much lower return.
Another mistake homeowners often make is to intentionally start the selling process with a higher asking price than what is reasonable because they think it will give them room to negotiate. This is a false assumption. Most buyers will assume yo're looking for a full price offer or close to it. Consequently, most won’t bother making an offer. By pricing it right you’ll encourage full price offers.
Additionally a price that is too high will give the impression that you don’t really want to sell and serious buyers will pass you by, so will real estate agents who have a prospective client.
As the seller, there are no surefire ways to predict the optimum price, but there are step you can take to help you get in the ballpark. Researching the market is key. By viewing similar homes in the neighborhood or surrounding area, you’ll be able to find a basic starting point. Don’t hesitate to ask the owners of those other homes for sale how they arrived at their price. Their experiences can often lower your learning curve when arriving at the right price.
Before you arrive at a price, ask a local real estate agent to do a Comparative Market Analysis of your home. Be sure to get more than one analysis for comparison. If neither analysis comes close to the price you were thinking of asking, you may want to re-think your price.
There is no surefire formula for pricing a home. It is a game of hit or miss. But through proper research and the advice of your REALTOR who view hundreds of homes each year, you can arrive at an optimum price.