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Pricing Your Property

Accepted Rules Of Pricing

The value of a home may be determined by multiplying the current market price per square foot by the property's square footage. Your current market price per square foot will be dictated by homes near yours that are similar in size, condition and amenities. It is generally quite easy to compare newer homes as they tend to be more similar. With an older home, values can vary greatly dependent on upgrades, general upkeep and renovations.

Your property price is affected by the homes that surround it. If your home is quite large for the neighborhood, your property's value will be reduced. If your home is considerably smaller than most other homes in the area, the value is likely to increase.

In today’s market place there are Short Sales and Bank Owned properties that are MLS listed at half the price of a normal listing. Yes, the home may be in need of incredible repairs and show poorly. These Short Sale and Bank owned properties bring down the average listing price in a neighborhood. Any evaluations of your neighborhood should include these types of listings.

Prime lots
Yes, your property value will be increased by these desirable lots. Determine what your home value will be without the lot and then add the value of the lot to the market value of the home.

Swimming Pools
While pools will add some value ($5,000 to $12,000 at the most) they will not come close to adding what they did cost to install. Account only for what they are worth, not what you spent on the pool.

Enclosed Garages
Garages that have been remodeled to function as living space will not always add value to your property. You have lost a garage and gained some living space, however, the pricing variations may cancel each other out. Deduct the square footage of the converted space from your total property square footage and multiply by the market value per square foot to obtain your property price.

Price It Right From The Get Go!

  • You will be able to determine if your property is priced correctly once it is on the market. If you are not getting many showings or offers your property maybe priced too high.
  • To increase showings and offers, lower the price of your home.
  • A home will sell for full price only if it's worth full price.
  • While a buyer's agent may not present you with a full price offer initially, this does not mean the buyer isn't willing to pay full price. That is negotiation.
  • Consider offering Buyer incentives. Many investors believe (in the $200K and lower priced properties) that a Bonus offered to the Buyers toward their closing costs is especially valuable. In the higher prices properties lowering the price will do much more to attract buyers.
  • A property is most likely to sell for full price within the first several weeks after being MLS listed because a buyer may fear that the home maybe sold to someone who offers full price.
  • If you overprice your home and a buyer agrees to purchase it for an inflated price, be aware that an appraisal could ruin the deal – a bank will not lend money for a property that does not appraise for the mortgaged amount.
  • If your property is not selling, reduce the price. If a property has not been sold within 3-4 months, and the seller has not reduced the price, most potential buyers will think there is an issue with the property or that you are not serious about selling.
  • Always offer the standard 3% buyer's agent commission. Offering more is unnecessary and offering less may ensure that agents may steer clients in another direction, telling them that the property is unavailable or has issues.

Pay for a Professional Appraisal.
By far the most reliable option to price your home is an appraisal, especially if you are in an older property or in an area that has many Short Sale or Bank Owned Properties listed on the MLS. If you are quite uncertain about your property value, this could be a good investment (typically $300-$400, depending on your area) when you take into account any money you might be leaving on the table or time you might waste when asking for too much money.

Price is Critical

  • If you are not getting many showings and/or offers, your price is too high, assuming that you have good photos on your listing and you are not making it difficult to schedule showings.
  • If you are getting a lot of showings but no offers, there is something wrong with your home that people cannot see until they come for a showing (perhaps: pet or smoke odors, odd floor plan, excessive and obvious need for home repairs.)
  • If many showings have been scheduled, but they do not bother coming inside to see the property, there is an external issue (examples: really busy street, unappealing power lines, properties in disrepair close to yours, obvious noise issues – highway near by, air traffic, close proximity to mass transit.)

Price is and always will be your most critical aspect in selling your home. Buyers have "told" you if they do not like your property with their lack of showings and/or offers. You must choose to respond by lowering your price if you want to sell your home. Do not take this criticism personally. Think of the sale of your property as a business decision. Do what you must to sell you property.

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