How to Set a List Price for Your Home
One of the biggest decisions you’ll make in selling your home is the list price. This is the price that buyers see when they are searching for a home to buy. It is more than just the price you’d like to get or the amount you owe on your mortgage. Pricing a home for sale is dependent on many factors:
- Market conditions
- Comparable sales
- Offering incentives
- Estimated net proceeds
- Pricing considerations
You must consider each of these factors to determine the right list price for your home.
The conditions of the housing market will have a key influence on how much you can sell your home for. The two options are either a seller’s market or a buyer’s market. In a buyer’s market, more homes are for sale than there are buyers, which means increased competition for you.
A seller’s market means there are more buyers than there are houses, and you are likely to have multiple offers for your home. You can list your home higher and still find a buyer.
You have to compare your home to the competition to see what homes in your area and size are selling for. A real estate agent will provide you with a list of comparables, including homes that are on the market now and those that have sold recently. They will be in the same neighborhood and about the same size.
Homes you compare yours to will have the same number of bedrooms and baths and other similar amenities. If they are priced higher or lower, you’ll have to justify the price difference. For example, you may have an outdated kitchen, which would mean you would price it lower than a comparable home that has been updated.
If you plan to offer incentives for buyers, you may raise your price to compensate. A prime example is when the buyer asks the seller to pay closing costs.
Another option is to offer the real estate agent a bonus over their commission if the home sells in a certain timeframe. If you have a specific deadline, this may help your home sell quickly.
Estimated Net Proceeds
You’ll want to know how much cash you need to make the sale a good deal for you. This cash may be used to finance a new home or for other plans. The sale price minus all expenses for the seller will be your net proceeds. Certain expenses are the seller’s to pay:
- Current loan payoff
- Commission for broker
- Unpaid property taxes
- Attorney’s fees
Costs Which are Negotiable between Seller and Buyer or Based on State Rules or Customs
- Survey fees
- Transfer taxes
- Title insurance premium
- Home protection plan
- Recording fees
- Natural hazard disclosure report
Once you’ve accounted for all other factors, you’ll want to set a listing price to reflect your potential buyers. You want to avoid pricing your home too low or too high and miss your target buyers.
A home priced too low will sell fast, but you’ll miss out on more money you could have made with a better price. A home priced too high will sit on the market for months with few showings and no offers.
Even if you are willing to take a lower price, you want to set the list price comparable to other homes. Your goal is to attract the same types of people who will be looking at your competition.
How Your Agent Helps You in Pricing
A real estate agent has access to a lot of information which will make it easier to set a price for your home. They will provide you with information about recent sales, and they will help you analyze the numbers.
Your agent will show you how many other houses are for sale in your area and what they have to offer. If there are few comparable properties on the market or your home is unique, they may suggest an appraisal. While this will cost you a few hundred dollars, it can help ensure you put the price close to the value of the home. If you price your home for more than its worth, buyers will have a difficult time getting approved for financing unless they come to the table with cash.
Choosing the right list price can make a difference in how fast your home sells. Work with a knowledgeable agent to ensure you set it to attract the right buyers.