Setting the Listing Price
Setting the list price for your home involves evaluating various market conditions and financial factors.
During this phase of the home selling process, BuySell supported by real estate proffessionals (chartered surveyors, estate agents ) will help you set your list price which you will decide based on:
- Pricing considerations
- Market value
- Comparable sales
- Market conditions
- Offering incentives
- Estimating net proceeds
When deciding the list price for your home, you should be aware of a buyer’s frame of mind. Consider the following pricing factors: If you decide to set the price too high, your house won’t be picked for viewing, even though it may be much nicer than other homes on the street. Compared to other houses for sale, your home simply looks too expensive to be considered. If you price too low, you'll short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had decided to set a higher price and waited for a buyer who was willing to pay for it.
TIP: Never say "asking" price, which implies you don't expect to get it.
A common definition of market value is: "What a ready, willing and able buyer will pay, at a price a seller will accept." Bear in mind that potential buyers have already been shopping around, and when they see your home they'll be comparing features and financing.
The "right" price is a balance between the maximum amount the current housing market will allow, similar properties for sale in the same area (your “competition”) and your own time limits in selling.
Although you, with the support of real estate proffessionals will decide where to set the price, the buyer’s will determine the value. They will compare your home and your listing price to similar homes on the marketplace. If your price is not competitive, they'll quickly reject it and move on to the next listing.
There's a rule of thumb that says a house priced more than 10% over market value discourages offers and limits the number of potential buyers up to 60%. Buyers who can afford the price can get "more house" for their money elsewhere. Buyers who cannot afford the price simply won’t look. This is why real estate proffessionals say, 'A house priced right is half sold." A fair market value will be determined by comparing the property with similar properties which have recently sold and (in some cases) with similar properties currently on the market. Experience in the industry has proven this "market analysis" approach is the most accurate of all approaches.
Using comparable sales
No matter how attractive and polished your house, buyers will be comparing its price with everything else on the market. Real experts agree that the best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood like yours. BuySell can furnish data on sales figures for those "comps" through its advertising databank, which you can analyze to determine listing price. The decision about how much to ask, is always yours.
The list of comparable sales BuySell brings to you, along with data about other houses in your neighborhood presently on the market, may be used for a comparison. To help in estimating a possible sales price for your house, the analysis will also include data on nearby houses that failed to sell in the past few months, along with their list prices. This report differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. In addition, an appraisal is done for a fee while this report is provided FREE by BuySell and may include properties currently listed for sale and those currently pending sale.
A formal written appraisal (which may cost a few hundred pounds) can be useful if you have unique property, if there hasn't been much activity in your area recently, if co-owners disagree about price, or if there is any other circumstance that makes it difficult to put a value on your home.
Consider market conditions
When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM (Days on Market) can run into many months. BuySell can tell you whether your area is currently a buyer's market or a seller's market. In a seller's market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer's market, if you really need to sell promptly, offer an attractive bargain price.
Studies show that the longer a property sits on the market the lower the price at which it is finally sold. Although the greatest amount of buyer activity typically occurs during the first three to four weeks after putting your property on the market, a reasonable time frame for selling a house may be between 30 and 90 days. If a house is on the market too long, potential buyers may avoid the house, wondering if something is wrong with it.
Some sellers list at the rock-bottom price they'd really take, because they hate bargaining. Others add on thousands to the estimated market value "just to see what happens." If you want to try that, and if you have the luxury of enough time to feel out the market, sit down and work out a schedule in advance. If there haven't been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn't bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you're tempted to dig your heels in.
Estimating net proceeds
Once you’ve estimated a market value, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful as you start looking for another home to buy. From the estimated sales price, subtract:
- Payoff figure on your present loan(s)
- Any prepayment penalty on your mortgage
- Attorney's fees, if any
- Unpaid property taxes
- Cancellation fees (if any)
- Capital Gains Tax
As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates.