Selling? What You Should Know About Setting Your Price
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
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
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,
which is a range that will fluctuate depending on the housing market in
your area and how much similar homes in your neighborhood are selling for.
If you're in a hot seller's market, you'll have the advantage.
While overpricing to some degree can be beneficial, you'll still want to
be careful and avoid pricing your home too high, which almost always is
As you work with your agent and set your price, you'll want to recognize
the factors that may prompt you to raise your asking price too much when
it isn't warranted. Some of those factors include:
Upgrades have been added. While many home improvements will help you
recoup a good chunk of your investment, it won't give you 100 percent of
what you paid. Also, the more personal the improvement - a swimming pool,
a sunroom, purple floors - the less likely it will be viewed favorably by
The need for money.
You're moving to a higher-priced area.
The original purchase price was too high.
The seller lacks factual comparable sales to prove what the market value
The seller wants bargaining room (listing more than 1-3 percent above
market value actually reduces bargaining power).
An unnecessary move, so you're not motivated.
On the other hand, if you're in a neutral or buyer's market, you'll really need to be cautious in setting your price.
Generally, the asking price - the price advertised when it goes on the
market - is set slightly higher than market value, usually 1 to 3 percent
above market value.
You should assume that negotiation will be necessary to reach an agreement
with the buyer. If you price your home too much above market value, you'll
get fewer showings and offers in which the potential buyer is fishing to
determine how low you'll go.
You'll want to establish your priority list: Are you more concerned with
selling quickly or getting the most money possible? You'll also want to
contemplate whether you think the agent's suggested price is reasonable
and whether you'd pay that amount if you were a buyer.
Your agent, as well as friends, relatives, and neighbors, will help you
point out your house's advantages and disadvantages that you may not have
thought about because you're too close to the house and not as objective
A third party will help you think of your house as a commodity - something
with positive and negative selling points. At that point you can decide on
a price that you deem competitive and in line what other houses in your
area have sold for.