After deciding to sell your house, the next big decision you have to make is how to value your property for sale. The value of your property drives what the asking price should be. This decision is not about what you want to sell your property for and even how much you need to receive, it is not about you at all. The value of your property – what someone will pay for it – is a strategic decision based on several factors in addition to additional calculations including:
• Basic features such as square footage, number of bedrooms and bathrooms
• Extra living areas and special purpose rooms such as a home office or media room add value. Library and garden rooms are desirable in some locations and price ranges.
• Condition of the property. This includes drive-up appeal as well as the presence or absence of needed repairs.
• Location – some prestigious locations add value to your property for sale while other less desirable ones will decrease value.
• Comparable prices for other similar homes in your neighborhood.
• Market conditions – is it a buyer’s market with many homes for sale or a seller’s market.
• Intangibles and upgrades – this is a catch-all for things buyers want and like. They may add real value to your property or they may encourage as faster sale. Intangibles and upgrades include updated kitchens and baths, granite countertops, new appliances, professional landscaping and landscape lighting, decks, swimming pools etc.
• Assessed value – this is the value establishing by the taxing authority and is usually tied to square footage. The assessed value does not reflect the other factors that may influence the value of your property at the time you are trying to sell it.
• How quickly do you need to sell your property? The answer to this question is more likely to affect the asking price than the actual value of your property.
Do your Homework
You can get an initial idea of the value of your property by multiplying your square footage by the average cost per square foot in your area. There is a wealth of information on the internet that can help you realistically value your property. For example Zillow provides a searchable database of information on homes for sale in your area. You will be able to compare asking price, square footage, features, and see photos of homes for sale. Even more useful to you in putting a realistic value on your property is Zillow’s information on selling prices, as opposed to asking prices, and number of days a property has been on the market.
Getting professional help to put the right value on your property
Real estate agents that routinely service your area will have market experience that you can use in establishing the value of your property. Contact two or three agents and ask them for a Comparative Market Analysis (CMA). You do not have to sign a contract with an agent to get this information. Most agents will help you with this for free in the hope that they will list your home with them later.
If you want another independent opinion, you can also pay an appraiser to analyze your property for sale and give you a fair market value estimate. This service usually costs between $250 and $400. You can find professionals who provide this service at Respond.com.
The value of your property is the most important factor in determining the asking price. But you also need to consider market conditions in pricing. Pricing is all about supply and demand. In a buyer’s market with many similar homes for sale or during depressed economic conditions, you may want to reduce your asking price up to 10% from the value of the property. In a seller’s market, you may choose to ask 10% to 15% more than the assessed value of your property.
Don’t forget to leave some room in your pricing to accommodate negotiations.