After unsuccessfully trying to sell her Chicago condo “For Sale by Owner” for a few months, Sarah Kadlic brought in a real estate agent to help price and market her property.
For many homeowners like Sarah, pricing a piece of real estate is a moving target. There’s no magic number for a home sale, real estate experts say, but instead, a price range where your home has a good chance of selling quickly.
The definition of quick, or the length of time it should take for a home sale, depends mostly on the region, says Brendon DeSimone, a broker with Paragon Realty Group. In urban hot spots like New York and San Francisco, the norm is as fast as a couple of weeks, while 30 to 60 days is a healthy selling cycle in smaller cities or more rural areas.
So, before you put your house on the chopping block with a broker, or attempt a home sale on your own, here are five ways to get closer to your spot-on price — and one that will help your home sell in a timely fashion.
1. Detach emotion from your evaluation
Even though you may think your home is superior to other properties in the area, it’s important to take a neutral, unattached approach to pricing your home. That means disregarding that the house next-door is selling for more even though you have a nicer porch and a better view; or overlooking the money, time and sweat you put into remodeling your kitchen. A home sale may not translate dollar for dollar.
2. Take your online research with a grain of salt
Many of us have taken a peek at Internet sites to see how much our home or our neighbor’s home is worth, but there’s been considerable skepticism about the accuracy of these values. Real estate investor Armando Montelango says that online price information could vary 20 to 30 percent from your actual home value, especially amid a housing downturn.
3. Calculate the price per square foot
According to ZipRealty agent Harrison Tulloss, figuring out the average price per square foot of homes in your neighborhood can be a starting point for determining your home value. But he adds that the price of your home could be “plus or minus 10 percent” from this rough estimate.
4. Walk through some comparable homes in your neighborhood
Tour some home sales in your neighborhood and take note of attributes such as size (number of bedrooms and bathrooms), house materials, land, and amenities (a renovated kitchen, a finished basement, etc.). The pitfall, DeSimone says, is that you don’t know the other circumstances in play, such as a motivated seller or the reverse, a seller who won’t accept less and has the luxury of letting their place sit unsold.
5. Contact a couple of real estate agents for an estimate
Call up three agents for opinions on the price of your home, and get a comparative market analysis, or a CMA, which tells you the prices of comparable, recently sold homes, on-the-market homes and homes that were on the market that didn’t sell. The key, says DeSimone, is having access to the “sold property” information that is only available through a broker. Though it’s not an exact science, the CMA is a more precise way to hone in on the range needed to net a home sale.
6. Factor in the days on the market (aka DOM)
Often overlooked, Montelango says, are days on the market, which tells you how fast houses are selling in your neighborhood. If you need to sell your house more quickly than the average DOM, it’s going to be necessary that you discount your price below other comparables in your locale, he adds.
Brokers say that homeowners do themselves a disservice by overpricing — a sky-high number that’s not reflective of a home’s size and quality will only turn off prospective buyers, and the longer it sits on the market, the more homebuyers question what may be wrong with it. On the other hand, homeowners may feel like they’ve missed out financially by going on the market with a price that’s too low.
Finding a competitive price that’s accurate and in step with market conditions, such as the economy, local job market, interest rates and inventory — is imperative to a home selling. In a healthy housing market, Sarah’s correctly priced home yielded results. Her one-bedroom condo sold for its list price.