When it comes to pricing your home for sale, pricing it right the first time is extremely important. This post will cover how to find the correct price range using a CMA, and the basic Dos and Don'ts of home pricing.
What is a CMA?
A CMA, or Comparative Market Analysis, is the process of comparing your home with similar homes in your area which are for sale, or which have recently sold. This process will give you the best price range for your home on the current market. Performing a CMA on your own can be difficult and should be done by a knowledgeable Real Estate Agent. Some agents, like myself, will perform CMAs free of charge for For Sale By Owner homes.
What Affects the Price of Your Home?
Location - An undesirable neighborhood will bring down the cost of the nicest home in the area, while a highly desirable neighborhood will bring up the price of the tiniest fixer-upper.
Size - In general, the larger the square footage, the higher the price will be. However, a house that is too big may be tougher to sell because the population of buyers who can afford it will be smaller.
Condition - The general upkeep of a home over the years will greatly affect the selling price. It's important to remember a house is an investment and keeping up with maintenance is essential in getting a return on your investment.
Current Market Trends - More than anything else, the value of a house will be affected by current market trends. Your real estate agent should be able to tell you if you're currently in a seller's market, or a buyer's market.
What Doesn't Affect the Price of Your Home
What Doesn't Affect the Price of Your Home
To put it quite simply, What you spent on it, what you want to make on it, what your friends or neighbors say, and improvements you've made on it will NOT affect the price of your home.
Focus on What You Can Control
Finding out your home is not worth quite what you were hoping for can be frustrating. Focusing on the things you can't control, which are the location, size, and market trends, will get you nowhere. Instead, focusing on what you CAN control, such as the condition on the house, repairs, and curb appeal, can raise the price of your home and benefit you in the long run.
Importance of Pricing it Right the First Time
Pricing your home correctly from the beginning, based on the CMA, will garner the most attention, help sell your home quickly, and bring you the best price possible. In a seller's market when prices are moving up, list your house at the higher end of the price range. By the time your listing hits the market it will have caught up to rising market and won't be underpriced. In a buyer's market you will want to do the opposite and price your home at the lower end of your price range. This will help you avoid over pricing your home in a market where prices are falling.
The Dangers of Overpricing
An overpriced home will not garner much attention from potential buyers, and will sit on the market for far too long. The longer a house is on the market, the less attention it will get, it will quickly become old news. These houses will often become stigmatized. Pricing it right after the fact will be too late, as buyers will see how long the house has been on the market and come to the conclusion that something is wrong with it. This situation usually leads to the seller dropping the price below market value in order to generate more interest.
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