Q & A: Pricing the House to Sell

Click a question to jump right to the answer:

  1. How do I know what price to offer for a home?
  2. How do you increase the value of your property?
  3. How is a home's value determined?
  4. How is the listing price of a home decided on?
  5. What are the most important factors when selling a home?
  6. What is the best time to buy?
  7. What is the difference between list price and sale price?
  8. What is the difference between list price, sale price and appraised value?
  9. What is the difference between market value and appraised value?
  10. What should I do to prepare my home to be put on the market?
  11. Where can I find housing market statistics for my area?

How do I know what price to offer for a home?

There are many factors to consider when placing an offer on a home, such as the current real estate market (is it a buyer’s or a seller’s market), comparable home sales in the neighborhood, and the condition of the home (move in-ready or fixer-upper). Other items that can impact the offer price are the contingencies of the offer – will you be asking for closing cost assistance, the inclusion of appliances, extended finance contingencies, or the sale of your home as a contingency? A seller may be more likely to accept an offer that is low in price and has no extra contingencies over a higher price offer that includes a contingency on the sale of the buyer’s home. For this reason, it is best to use an experienced real estate agent who can formulate an offer that not only includes all of your needs and wishes, but is also appealing to the seller.

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How do you increase the value of your property?

There are many influences the value of a home. Often the biggest factor – the current real estate market – is out of your control. But, there are other aspects that you are able to control, and thus increase your home’s overall value. Some common improvements are: landscaping, new paint (interior and exterior), new windows, roof, updated appliances, renovated kitchen, new carpeting, etc… One thing to keep in mind when updating your home is to be careful not to price yourself out of your neighborhood. For example, if the average home in your neighborhood sells for $250,000, you do not want to add upgrades to your home that would price it at $400,000. Another great way to improve the value of your home is to improve your neighborhood – starting a neighborhood watch, keeping the neighborhood clean, or landscaping the local park are all improvements that can add value to your home’s worth.

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How is a home's value determined?

A home’s value can be determined using multiple techniques.

- CMA: Prior to listing your home, a real estate agent will perform a Comparative Market Analysis (CMA) which estimates the value of your home based on recent sales of similar homes your area.

- Appraisal: Lenders require that an appraisal be performed prior to closing to ensure the home’s value is not less than the loan amount. Appraisers also base their estimates on prior sales in the area, square footage, location, and home features and upgrades.

- Assessment: Assessments are periodically performed on homes by local governments to evaluate the home’s property taxes. Since property taxes are based on property value, features such as location, size of lot, age of home, and home condition are factored into the assessment.

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How is the listing price of a home decided on?

A new listing should be priced according to the current housing market. A real estate agent will perform a comparative market analysis (CMA) on your home, which estimates the value of your home based on recent sales of similar home your area. Using the CMA and their market experience, the real estate agent will price your home accordingly. Don’t hesitate to ask your real estate agent how they came to the listing price of your home and for examples of the homes they used as comparison in the area.

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What are the most important factors when selling a home?

There are many factors that affect the sale of a home. Price is often one of the most important factors, as a home that is priced too high will deter many potential buyers. A home’s location and condition will impact the pricing of a home, and therefore also the sale of the home. A home’s location cannot be changed, and therefore it is important that controllable factors such as landscaping, paint and other repairs are made to the home prior to listing it on the market. Finally, having the right real estate agent to competitively price, showcase and market the property is vital to a successful sale.

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What is the best time to buy?

The best time to purchase a home is dependent on both your personal life and financial status. Financially you should have enough money in savings to cover the down payment, closing and moving fees with ample savings left over to cover any miscellaneous or unexpected costs. In addition you should be at a stable point of life where you don’t see yourself moving in the next five or more years and you are ready for the responsibilities of homeownership.

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What is the difference between list price and sale price?

The list price is how much the seller’s asked for when placing the home on the market. The sale price is how much the home actually sold for.

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What is the difference between list price, sale price and appraised value?

The list price is how much the seller’s asked for when placing the home on the market, the sale price is how much the home actually sold for, and the appraised value is the worth a professional appraiser estimated for the home. Lenders often require an appraisal prior to closing to ensure the home’s value is not less than the loan amount.

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What is the difference between market value and appraised value?

The market value of a home is the estimated price at which the home would currently sell. To obtain the market value of a home, agents will perform a Comparative Market Analysis (CMA) which will estimate the value of the home based on recent sales of similar homes in the area. The appraised value of a home is the worth a professional appraiser estimated for the home. Lenders often require an appraisal prior to closing to ensure the home’s value is not less than the loan amount.

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What should I do to prepare my home to be put on the market?

The first impression a buyer receives when entering your home will have a direct effect on the sale of your home. Buyers want to see a clean, move-in-ready home that they can picture themselves living in. Some preparation musts are: mow the yard, trim the bushes, sweep the walkway, touch-up paint (both indoors and out), de-clutter your home (pack up and remove any items you do not use regularly), organize all closets, and make sure all lights and appliances work properly. Fix any maintenance items, such as squeaky doors, broken windows, missing hardware, etc… If you have pets, make sure there are no pet smells, stains, or unsightly items for the buyers to find. And always make sure your home is spotless before each showing. Selling a home can require some extra upkeep and maintenance, but your hard work will pay off!

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Where can I find housing market statistics for my area?

Your real estate agent is the best source for local housing market statistics and information. Not only do they have access to market data through their real estate board and brokerage, they also have the experience and area knowledge to interpret and apply the statistics to your specific real estate needs.

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