14 Things to Know About How to Price a House

Table of Content

• Don’t let your asking price lump you in with the competition
• How we make money
• What Is An Appraisal Contingency?
• What Is Fair Market Value (FMV) In Real Estate And How Is It Calculated?
• Avoid obscure and century pricing
• When Is The Best Time To Sell A House?
• What happens if your house doesn't appraise for the purchase price?

That’s why location is such an important factor in a home’s value. Outside of standard market appreciation, a home’s land will only increase in value if the area around it improves. For example, 64% of buyers say being in a walkable neighborhood is very or extremely important, according to the Zillow Group Consumer Housing Trends Report 2021. Avoid the temptation of making a few little pricing tweaks over time. Older listings simply aren’t as attractive to buyers, and your goal is to sell quickly.

However, a home’s selling price, or sale price, is not the same thing. The selling price refers to the final amount the home actually sells for. The selling price is dependent on how much a buyer is ultimately willing to pay, and how much the seller is willing to accept. It can be higher or lower than the listing price, depending on repairs needed, buyer competition, local market conditions and a number of other factors. By reviewing the information above, you’ll be well-equipped to know if the asking price that you have in mind is accurate and priced to sell.

Don’t let your asking price lump you in with the competition

Supply and demand are powerful forces, with buyers often willing to pay a premium for a rare, but hot commodity when available homes are hard to come by. If you find yourself caught in a situation where many competing homes are available for sale, and buyers are hard to come by, you may not wish to sit idle. To reduce the amount of time that a property sits on the market, it may make sense to lower your asking price or consider offering buyers added incentives to help speed a sale along.

In most cases, though, knocking off $1K to bring the price below a rounded figure doesn’t make that much difference to a buyer or seller. Your agent takes all recent sales and compares them to your home — the number of rooms, square footage, and bathrooms. They may look at old listing photos to see if any updates were done on the house, and will add or subtract value to your home based on your updates. While not a formal appraisal, a CMA can often land quite close to the home’s appraised value.

How we make money

Even if you and the seller agree on a price, the appraiser’s valuation will determine the amount your lender will loan for the property. If the appraisal comes in too low, it’s possible you will have to come up with a larger down payment, or you risk the deal falling apart. Buyer demand tends to be higher when long-term interest rates are lower, as low interest rates give buyers more purchasing power. Conversely, when interest rates are high, buyers may have a harder time paying off other debt, which can impact their ability to buy a home.

Remember a seller can ask any price they want for a home, but in no way is the asking price a determination of value. The Zillow Zestimate is not accurate for determining the market value of a home. If you are working with a seasoned buyer’s agent, they will prepare a Comparative Market Analysis or CMA of the home you are interested in. A home with an asking price that is overpriced will often languish on the market and often have one or more price drops. Or, outside of their agent’s advice, what a seller wants for a home.

What Is An Appraisal Contingency?

Often, the best time to sell a home is in the first half of May, while the best time to buy one is in early fall before school starts and families have settled into new housing. But like we discussed above, market forces can impact sales potential, and the arrival of a pandemic can call anything into question. As a general rule though, you may find that you’re able to maximize your selling opportunities by listing your home for sale between April and July.

If your 1,200 square foot ranch home appears in a list of 5,000 square feet McMansion’s, you might have a problem. Before the pandemic, a home office was a “nice to have” but not a major selling point. A top agent will know what the market currently values and if a few small tweaks, or even staging an extra bedroom as a home office, could bump your asking price. You could set your list price off the pre-listing appraisal knowing that it’s likely the bank’s appraiser will determine a similar value. For many people, their home is their most important financial asset. Find an agent who knows the local territory and trends, and who can go beyond an online home value estimator when setting list price.

What Is Fair Market Value (FMV) In Real Estate And How Is It Calculated?

A lot of factors can come into play when selling or buying a home, and not all of them can be anticipated. If you can be flexible and react quickly to changingmarket conditionsor new information, you’re more likely to get the best price with the least aggravation. If you receive and accept an offer that’s much higher than comparable sales, your home might not appraise accordingly. If the buyer can’t get a mortgage on the house, they could back out of the sale. A home severally overpriced even in a seller’s market could warrant starting negotiations well below asking.

You might want to initially set your price at the last comparable sale in a balanced or neutral market, then adjust it for the market trend. Pricing at $254,500 would make sense if the last sale closed three months ago, but the median price has edged upward of 1% per month since then. Most local assessors' offices will provide lists of sales, and some newspapers publish quarterly sales reports in their business and/or real estate sections. You can use a comparative market analysis and comparable home sales in your area to help you determine market value.

In some cases, an agent may even choose to set the asking price deliberately low in order to spark a bidding war. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.

Current Mortgage Rates Up-to-date mortgage rate data based on originated loans. The next step after you've collected all of your data is to analyze it based on market conditions. Some agents are much better at figuring out how to price your home than others. Of course, there's nothing stopping you from dropping your price later, but that can be a matter of too-little-too-late. You'll want a comparative market analysis so you're as close to value as possible. Agent directory allows you to search for real estate experts in your area and includes reviews and other insights to help you compare and choose the agent who is right for you.