If you’re selling your house, one of the first steps you’ll take is setting an asking price; a maneuver that requires the ability to find the perfect balance between attracting solid offers and ultimately receiving the top dollar.
If you’re working with a realtor or other industry professional, you’ll probably hear talk of fair market value, which typically means the highest value an educated buyer will pay. Fair market value is usually not the asking price.
Many agents will begin by conducting a competitive market analysis of your house and give you an estimate of the fair market value of your home. The analysis takes into consideration comparable home sales, typically over the last year, taking into consideration similarities and differences between the other homes and yours. It will also consider the housing market in your area. If you’re in a hot sellers’ market like several communities throughout metro Atlanta, you’ll have the advantage.
As you work with your agent and set your price, you’ll want to ask yourself (and your agent):
1. What are the facts relative to my house for this market? Be careful when you consider pricing to focus on the factual data available versus emotional connections.
2. What are the market conditions for your specific neighborhood and community? Not all communities are created equal in this market. Not all neighborhoods within a community are created equal. It can be a complex equation to get your price just right.
3. How does my house stack up against the competition? This one is very tricky. It’s often helpful to take a step back and view your house as if you were an upcoming buyer. Your real estate professional can also help you evaluate this. Your agent, as well as friends, relatives, and neighbors, can assist you by pointing out your house’s advantages and disadvantages form a more objective viewpoint.
4. Am I being realistic? You absolutely want top dollar for your investment, but be careful to separate this from the emotional attachment you may have to your home. Also consider your motivation for selling your home.
Here are some other things to thoughtfully consider as you evaluate putting your house on the market:
Some upgrades and home improvements warrant being included in your asking price consideration. Kitchen renovations, bathroom renovations, and some others should be factored in. Some are lifestyle additions that you and your family enjoyed while you lived in the home. Also, the more personal the improvement-a swimming pool, a sunroom, purple floors- the less likely it will be viewed favorably by potential buyers. While you may be able to recoup some of your investment, it won’t give you 100% of what you paid. Your real estate agent can help you evaluate what return percentage you can expect on your home’s improvements.
Another common issue is that your home may have lessened in value since you purchased it, which is the case for many homeowners in today’s market. Some sellers want to recoup as much of their original investment as possible with housing sales trending upwards. This can be a slippery slope. Make sure you have objective, comparable and recent data-sold comps, pending sales and other data- to prove what the true market value is. Research shows that listing your house for as little as 1-3% above market value can actually reduce the buyer’s perceived bargaining power, causing your house to stay on the market longer.
Evaluate and be honest about your priorities. Are you more concerned with selling quickly or getting the most money possible? Unfortunately, this is a case where it is one or the other; rarely is it both. You’ll also want to contemplate your price and determine objectively whether you would pay that amount if you were a buyer.