How to Set the Selling Price on Your Home

Determining a selling price on a home relies on a multitude of factors, which are stable regardless of economic conditions. The selling price should account for fees, renovations costs and of course the true market value.

Similar Properties

According to the North Carolina Cooperative Extension, similar house values can be found on individual town and city databases. Houses are assessed for tax purposes; therefore, estimated values are easily located online for most areas. However, keep in mind that those values are often higher than the true market value. Another good method is to check with local realtors to see how much similar sized properties are on the market for, or recent selling prices. Location of similar houses is another important factor to keep in mind when determining a price.

Set a Fair Price

Far too often sellers are afraid to lose money when selling their house. However, real estate values depend largely on supply and demand. If you must sell during an economic downturn, then price accordingly, if not, wait to sell until demand increases. However, you are at the mercy of the housing market, which deems prices on value rather than emotions.

Do Your Homework

Look at the current housing market (low or high selling prices), similar property values and all fees associated with closing the sale. By doing your research you will be able to negotiate a fair deal without feeling like you are being taken advantage of. Do not always trust your realtor either, do independent research and pick a price that you feel comfortable with and one that will compete in the current market situation.

Do not be Afraid to Refuse an Offer

I studied economics and management in college and if I learned one thing, it was that by doing your homework you can easily counter any offer. Never take the first offer unless it is very close to your original price. In the first round of negotiations, the buyer will lowball their offer in order to get you to bring the price down. If the property is in a desirable area, refuse to lower your price. Then they may make another offer, which should be more acceptable. Knowledge is power in any financial market, the more you know, and the better you will be when making any sort of counter offer.

Tally Recent Improvement

Recent home improvement projects can drastically increase the value of the property. Make sure to point out recent improvements and justify the price with them. For instance, if you added a $20,000 in-ground pool and a new $50,000 modern kitchen, then the price should be set accordingly. Recent home improvements are valuable because they take not only money, but time. Once already established, the buyer will see the value associated with not having to undertake costly improvements themselves.

Set Price above Market Value

The selling price should be set higher than market value, one to five percent above, which will leave plenty of room for negation purposes. A low price may draw in more potential buyers, but will drastically lower your bottom line price.

Sources:

http://www.ces.ncsu.edu/depts/fcs/pdfs/fcs435.pdf

Personal experience as an economist