Selling your house isn’t anything like having a yard sale. You can’t haphazardly slap a twenty five cent sticker on it and call it a day. A property is a complicated thing to put a value on.
How much you should ask for your home depends on a lot of factors (both internal and external), as well as some of your own preferences. Everything’s a little nuanced, and you might need to look at the big picture to come up with the right number.
Looking at Similar Homes in Your Neighborhood
Also known as ‘running comps’, one of the most reliable ways to come up with a ballpark figure is by looking at other homes in your neighborhood.
- What are they priced at?
- Do they have the same amount of bedrooms and bathrooms as your home, with similarly sized yards?
In order for this kind of estimate to be accurate, you need to look at homes that are in similar condition and age. It doesn’t matter how much these homes list for if they aren’t selling. Make sure you’re taking the final sale price into account, rather than the initial listing price.
Taking Condition into Account
Your home is only worth top dollar if it’s in top condition.
If you need a new roof, you aren’t going to be able to fetch the same price as you would if your home were pristine.
Things like bad plumbing, code violations, water or fire damage, and even old flooring can drag down the potential value of a home.
If you want to ask for the maximum amount, you’ll need to get the problems fixed first. Sometimes, it’s worth it to do so. Certain repairs have great return for the investment.
Other repairs cost more than the value they add.
When this happens, you’re better off selling the home at a discount than putting in all that time and money – just let the new buyer know what the deal is.
For a more detailed explanation of how to run comparables, click here
Watch How the Market Moves
Some houses are worth an awful lot on paper, but the buyers just aren’t there. In a warm market that favors sellers, sellers are able to ask a little more. In a cold market where the buyers are few and far between, the situation becomes much different.
In a cold market, it helps to ask less for your home.
Competition is high.
There are a lot of sellers who want to successfully complete the sale of their home, and they’re often willing to accept less if they’ve been waiting for a while. Homes in these kinds of markets typically sell at price cuts, and sometimes the cuts are drastic.
Considering Your Personal Timeframe
How quickly do you want to sell your house?
If properties are selling very quickly in your area, your personal timeframe may not matter.
If the market is stable and predictable, you might not need to wait that long.
If you aren’t in a hurry to be someplace else, you’ll probably be content to request the highest possible value for your home.
If you’re in a cold market, you might want to wait to sell your home.
If you can’t wait very long, prepare to take much less than your home appears to be worth.
Homeowners in situations where things aren’t moving at a desirable pace often sell their homes for much less to draw in buyers. Some of them decide to go outside of the traditional market entirely.
When Working with a Real Estate Agent
Real estate agents work hard for you, but they don’t work for free.
For staging services, showing the property, and closing the sale, real estate agents take a commission.
This can be anywhere between 5% and 10% of the total sale price.
A lot of sellers want to offset that commission, which leads to properties being listed for more than what they’re actually worth. This pays the realtor without taking money out of the pocket of the seller.
In excellent, strong markets, this tactic actually works.
If the market around your home isn’t great, you’re probably going to go through a few price cuts. These price cuts never lower the real estate agent’s commission, and your potential profit will go down more and more.
No matter what kind of market your house is in, you’re going to want to consider how much your agent is going to cost you.
When Selling a Home By Yourself
When you sell your home by yourself, your price doesn’t need to reflect a commission. You aren’t paying anyone else. What you do need to consider is how much the proper paperwork is going to cost you. You might also want to pay for a professional inspection and appraisal.
People who sell their homes on their own often run into other costs. Listing and advertising costs can tend to run high. You’ll also need to do all of that work on your own, so consider how much your labor is worth. This is especially important if you’ll need to take time off from work to handle the showing and sale of your property.
When Selling to an Investor
Most investors are willing to buy almost any property, and this process works backwards. You don’t give them a number – they give you one. Investors will generally calculate their own offers, and it’s your job to determine whether or not you’ll accept that offer.
Investors consider a bunch of things when they’re creating that offer.
- The condition of your home
- the neighborhood
- and the actual value of your home minus repairs all come into play.
They’re going to offer you less than what your home appears to be worth on paper, but they’re also willing to buy your home no matter what.
You won’t be asked to pay for repairs, and you’ll be getting fast cash in exchange for your home.
Investors are a great option for people whose properties are hard to sell, especially if those people want to sell their property quickly. This is why investors buy so many problematic properties or foreclosure houses.
What Should I Do With My Home?
You know more about your situation than anyone else does.
Compile all of the factors surrounding the sale of your home, come up with a timeframe, consider what your needs are, and choose a price and option that will help you get from sale to sold in a way that you feel good about.
The sale of every home is different – just prioritize your own needs.