When selling your home, one of the hardest tasks with which you will be confronted is the establishment of an acceptable selling price, a price that is acceptable to you and to a potential buyer of your home.
Let’s face it, calculating the price can’t be that hard, can it? You have spent a lot of time and energy fixing up the place and you have the receipts to show for it. If you add up all of the money spent on the new kitchen, the carpet, paint, landscaping, etc., it will add up to a significant sum of money. Add to that your original purchase price and, considering the effects of inflation, a modest profit after selling expenses and closing costs, the selling price can easily be determined. Isn’t that right? No, it’s wrong!
Or, since the house of your neighbor, which is identical to yours, sold in just a few short weeks, and at, or above, its listing price a few years back, you naturally expect that your house will do the same. Isn’t that right? No, it’s also wrong.
If you are thinking that there is a relationship between your cost and the new selling price of your home, it is time to rethink the situation. Or, if you are thinking that your house, almost identical to your neighbor’s home which sold in the past, will sell for the same price today and in the same amount of time, you will find this expectation unrealistic, also.
These two sellers’ perspectives on price and value are common misconceptions and are quite understandable. After all, for most of us, our home is our most precious tangible asset, and it’s not too hard to understand why we would get emotional about its value.
However, understanding the differences in price, cost, and value is really important. It is important to recognize that there is really only one determining factor when selling your home, and that is the determination of the value of your house. To establish a selling price that is close to the ultimate market value of your home, it is wise to seek the assistance of an experienced REALTOR ®.
Since only the eventual buyer of your house will be establishing its value when he buys it, you and your REALTOR® can only approximate that amount. Your REALTOR® does, however, have the tools and the experience to come close in determining that amount. The most valuable tool available to assist him in the determination of a value driven price is a valid comparative market analysis or CMA. This CMA analysis will give you the best approximation of the value of your house, because it is based on the most recent sales of homes like yours, and it is therefore determined by buyers, not the sellers.
In most cases, CMA information is readily available from your REALTOR®, but it is subject to interpretation and analysis. It is in the interpretation of the CMA where your REALTOR® can offer the most valuable guidance. The CMA analysis will provide insight into determining the best and highest selling price for you by looking at sold properties, and most likely will also provide valuable information on properties that did not sell. By analyzing the expired, cancelled, and withdrawn listings, your REALTOR® may discover some nugget of information as to why these listings failed to sell, which will help you to avoid the same pitfall.
Once you have determined the most likely ultimate selling price, your REALTOR® will recommend a beginning listing price for incorporation into your listing on the MLS (Multiple Listing Service).
So, in summary, when you are in the process of establishing a selling price for your home, don’t confuse cost with price or price with value. Above all, hire a good REALTOR® to assist you in determining the best selling price for your home and the starting listing price that will get you there.
Your next step will be to establish an aggressive marketing plan for your property – the subject for a future Reflections article.