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They may just think it is worth it, leave wiggle room for negotiating, know it is overpriced but are hoping for more or any number of other reasons. But you also want to offer a price that gets you the house in a competitive bidding situation. Having a REALTOR® assess your home’s value is less detailed than what you’d receive with a professional appraiser, but it’s still a good option. Plus, they can make recommendations for how you can improve the aesthetic appeal of your home.
At times when inventory is high and demand is low (aka “Buyer’s Market”), homes may need to be listed at a slightly lower price to stand out from competition. Listing your home at a competitive price can attract the attention of home buyers and increase the number of offers you receive. When a property receives multiple offers, the seller has more negotiation power. While this scenario happens frequently, many savvy agents will set up search parameters for their buyers to include properties listed a little bit more above their price ceiling. Knowing how flexible home prices can be, buyers should be made aware of properties that could be a good match for them, even if those homes are above what they want to pay. Often times the buyer can offer under the list price, or the property will get reduced.
What Is An Appraisal Contingency?
A CMA from an experienced real estate agent would not just establish the correct asking price for your home but also lead to a quick and hassle-free sale. Another worthwhile area to consider when determining an asking price is home improvements. If you have completed some value-enhancing renovation projects, like upgrading the windows or remodeling the kitchen, they will also contribute to how much the home is worth. For example, suppose a home in your neighborhood that’s very similar to yours sold last month for $300,000. However, your home also has a recently upgraded kitchen and a new roof.
Although pricing too high can be a mistake, don't worry about pricing your home too low. Properties priced below market value will often receive multiple offers that will then drive the price up to market level. If there are a lot of people who want homes and the housing supply is unable to meet that demand, then the home value is likely to be higher. That tends to happen when the economy is performing well, housing market conditions are excellent, mortgage rates are low, work is in plenty and people have higher wages.
How Is Sale-to-List Price Calculated?
Conversely, you might want to add 10% more to the last comparable sale in a seller's market. You can ask more than the last comparable sale, and you'll likely get it if there's little inventory and there are many buyers. Average square-foot cost doesn't mean you can simply multiply your square footage by that number, at least not unless your home is average sized. The price per square foot rises as the size decreases, and it decreases as the size increases. It's common for homes to sell for more than 100% of list price in a seller's market. Talk to your real estate agent, or check out the Federal Housing Finance Agency's house price calculator if you need more help.
In a strong seller’s market, like we are in right now, you won’t even be on a seller’s radar. Instead of thinking how far should below the list price should I offer, you should be thinking how much over asking should I offer. A home could be overpriced, underpriced or priced right at fair market value.
How To Price Your Home for Sale
Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products. An asking price is a starting point for the sale of a home, but it is not the end of the conversation. These prices are typically not set in stone — they can be, and often are, negotiated.
Consider these potentially hidden costs of buying a home when planning your budget. You never want to assume that the asking price of a home is also its fair market value. Home values are somewhat subjective and always changing, so understanding how home values are calculated and what factors impact them can help you make a sound real estate investment.
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If you’re selling a house with significant issues that you do not want to repair or update, consider listing it “as is.” Your agent can provide the pros and cons of an “as is” sale. Your home’s condition has such a major impact on its value that some buyers will pay up to $15,000 more for a well-maintained home. It’s still possible to sell a home that needs some work, but you have to factor that into your list price and profit expectations. But other factors need to be considered before making an offer on a home.
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.
If a home has been sitting on the market for more than a month, it is likely overpriced, so you will want to take note of that when gathering figures. One of the most important steps to pricing your home is conducting a comparative market analysis to gain an understanding of how homes similar to yours are priced. To perform a CMA, research homes with qualities similar to yours – such as location, size, amenities (e.g. pool), upgrades, etc. Location and size are two of the main variables for CMA’s that help determine a price range for your home. If you think that updates would increase your list price, talk to an experienced agent before you call a contractor. According to Peter Clark, who ranks in the top 3% of 5,347 agents in the Portland, Oregon area, he asks potential sellers to weigh the remodeling investment carefully.
In some cases, the final selling price for a home may be lower than the asking price. This can occur if there are fewer offers than expected, for example, or if the home sat on the market for a while and the seller decided to lower the price to generate more interest. The offers that appear on this site are from companies that compensate us.
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