How To Properly Value Your Home

how-to-properly-value-home

Buying a home is one of the largest investments you will ever make in your life, it’s where you plan to make memories and build your future. However, when it comes time to find a new place to make memories and put your house up for sale, it can be intimidating and stressful. Here’s what you need to know so you get a fair price.

Pricing is about data aggregation. Smart sellers know that their home is worth what someone will pay for it, which is based on what similar homes have sold for. This means knowing as much as possible about the market and the neighborhood within a mile or two of your home. You can get information on comparable homes from real estate agents, online databases and lots of other online resources. But keep in mind that looking at active listings only tells you what homes similar to yours haven’t sold for— conducting close comparisons to homes like yours that have the same age, style, square footage and amenities that have sold within the last year may give you better data. You know your home best, so price it according to how you believe it stands up to the competition.

Think like a buyer. A home has a lot of sentimental value, especially if it’s your first home or the place where you got married or raised your children. The truth is, a buyer doesn’t have the same perception of your home as you, so there’s a certain amount of nostalgia you have to let go of in order to sell your home. Your buyer is looking for quality, value and a certain amount of trust that your home is in sound condition.

Use pricing strategies. If you went to buy a Playstation today, you will almost always find it priced at $399. All said and done, it comes to well over $400 with tax included, but in the buyer’s mind it’s still only $399 (less expensive). The same tactic applies with homes, especially with today’s sophisticated real estate databases. If someone is looking for a home around $500,000 and you price your home at $510,000 to cover closing costs, it’s likely that many potential buyers will never even see your property. It is also very possible that by pricing your home below market value, you could stimulate the so-called “herd mentality,” and stimulate a bidding war between potential buyers that could lead to a much larger offer than you originally anticipated.

Have a contingency plan. You may have an unreasonably high expectation of what your home will sell for. It doesn’t hurt to have a contingency plan in place that you have discussed with your agent. Home sales move very fast in some cases, and it’s better to have a “Plan B” in place beforehand rather than loosing out on the sale of your home.