Pricing a home is part science, part art, and understanding the reasoning behind this pricing will make you a smarter buyer and help you understand exactly what you’re getting for your money.
Before sticking a “For Sale” sign in front of a home, here are the five factors Realtors look at when pricing it:
1. What’s happening in your local market. Real estate conditions can change quickly, so understanding what’s going on now is very important. For example, how fast are properties being snapped up? Is it a buyer’s or seller’s market? Low inventory means it’s a seller’s market and there’s more room to push prices up, while high inventory means it’s a buyer’s market. Our market, in particular, can change quickly, so you need to keep yourself updated.
2. The specific location of the home. I’m not just talking about its ZIP code—I’m talking about whether there are good schools nearby, it sits in a cul-de-sac or backs up to a busy street, etc. It’s worth noting that in most areas, homes that have easier access to a highway fetch a higher sale price.
3. A comparative market analysis. Oftentimes, sellers will already have a number in mind when I meet them for a listing presentation, and this number isn’t necessarily the most accurate. Homeowners tend to develop an emotional attachment to their homes over time and think it’s worth more than it is. A Realtor will be able to look at comparable properties on the MLS that have sold in the past six months to give the home a comparative market analysis. The MLS provides a lot of good information for this purpose, too.
4. The home’s amenities (and overall appeal). Today’s buyers look at more than just a home’s square footage. Most of the time, they prefer brand-name appliances, larger bedrooms and closets, lots of light, central air conditioning, outdoor space, easy parking, and, in general, new construction over older homes. Layout and functionality are also huge pluses in terms of desirability, which means older homes that aren’t upgraded will be priced lower.
5. Whether or not it’s a fixer-upper. You won’t get a lower price just because you’re thinking of buying a fixer-upper—location plays a big role in pricing these types of homes too. On the other hand, if you’re buying a newer turnkey property, expect to pay more for it because quality trumps quantity every time.
If you have any more questions about how homes are priced or you’re a seller and you want to know what your home is worth, feel free to give me a call or send me an email. I’d love to speak with you.