An online guide to correctly valuing your home for sale.

Pricing your home correctly is probably the most important step in marketing your home for sale. Knowing how much your home is worth can save you lots of time on market and money in advertising costs. Priced too high, your home will sit on the market and cause you to expend additional efforts to market the home. Many home sellers, for sale by owner or otherwise, allow their egos to get in the way when pricing their home. Economic researchers have found that emotions play a big part in how home prices are set.

It’s Been Said That Correct Pricing is 90% of Marketing a Home for Sale...

Properly priced you may receive multiple offers on your home and even see the home sell for more than list price. Statistics show that the longer a home stays on the market, the lower the final sales price to list price ratio.

After a while, buyers sense that something must be wrong with the property and will either avoid it or make lower offers. The offers sellers receive after sitting on the market for long periods of time are typically much lower than those received in the first few weeks of placing a home on the market when buyer activity is at it’s peak.

Home Sold Within:	Percentage of Homes:
1 Month	40%
2 Months	7%
3 Months	7%
4 Months	20%
5 Months	10%
6 Months	7%
7 Months	9%

Online Electronic Appraisals

Electronic Appraisals are reports prepared from data gathered from tax record compiled from the property records department of your local county or city courthouse. These reports will give you loads of information about recent home sales in the area surrounding your property. Often Electronic Appraisals include community information and data about nearby industry, shopping, schools etc. To order an electronic appraisal of your home, CLICK HERE.

Comparative Market Analysis (CMA) - Property Valuation

A CMA is a snapshot of the recent home sale market activity around your home. These are usually prepared by a REALTOR in anticipation of listing a home for sale. Generally a CMA is comprised of property listing data gathered from the REALTOR MLS. A CMA is not an appraisal of value, but rather an analysis of what recent homes sale activity has taken place in your market. It may contain value adjustments or it may simply provide you with the data from the MLS. CMA's provide a suggested list price based on comparable sales (homes that are similar in style, square footage, number of rooms, bedrooms, age, construction and amenities to the subject property) For a CMA, CLICK HERE.

National Association of HomeBuilders Price Estimator

The National Association of HomeBuilders (NAHB) has created an online estimation tool to assist sellers in determining the average price of a home with various features in different parts of the country. While this method is probably not a terrific measure of market value, it will give you an idea of what similar homes are selling for in your area. To access the NAHB Home Price Estimator CLICK HERE.

Professional Appraisal

The number one reason homes don’t sell is because of the owner’s unrealistic expectations concerning the value of their home.

Keep in mind that no two homes are exactly alike and many homes are so unique as to require a more in depth analysis for proper valuation. A formal appraisal is the most accurate (and most expensive $350-$1,000) method of determining property value. A trip to the County or City Property Records office can provide you with the same property sales data, however, trained professional appraisers familiar with your area are the most accurate source for obtaining an objective listing price for your property, expecially if your home is unique or in an area of dissimilar homes.

But I Can Always Come Down Later

A lot of sellers think that they can price their home a few thousand dollars higher than market value and just “see what happens”. But what invariably happens is that they miss they best period of buyer activity and best chance for the highest selling price. Real estate agents know that the best time to sell a home is when it first goes on the market. That’s when all the buyers who have been looking for a home and all the buyers just coming onto the market see your property listing. After the first few weeks, buyer activity naturally falls and levels off with just the new buyers coming onto the market.

Be Market Aware and Price Realistic

Become aware of customs for the conveyance of personal property with the home in your area for competitive reasons. For instance, in some areas, washer, dryer and refrigerator will generally convey with the property. If that’s the case in your area and you’re planning on taking yours, you may want to factor that in when setting your price.

The number one reason homes don’t sell is because of the owner's unrealistic expectations concerning the value of their home. You must be realistic when setting the price and you must stay on top of the sometimes changing market. Staying on top of the market means keeping track of what’s going on in your area with comparable home sales. If there haven’t been any offers after about 3 weeks, and other comparable homes are selling, it’s time to revisit your pricing. Don’t be afraid to lower your price to prevent your property from becoming stale on the market. If it doesn’t work right away, you may have to lower it again until it reaches a level that attracts buyers.

Don’t get caught up in how much money you’ve got in the property, the cost of the improvements you’ve made or how much you need to move to your next home. Potential buyers don’t care about your needs, only their own, and they are not willing to pay you anymore than the amount they can buy a comparable home in the same area. Focus on what you are getting for your home. Just like any commodity, demand and price are inextricably intertwined. At some price the demand for your property will be high. Regardless of how you go about determining a listing price, the market will determine what price your home will bring. Be keen to what the market tells you.

A Word About Tax Assessments

Some people think that tax assessments are a way of evaluating a home. The difficulty here is that assessments are based on a number of criteria that may not be related to property values, so they may not necessarily reflect your home's true value. Assessments can vary greatly from neighborhood to neighborhood due to the fact that a visual inspection cannot be made on every home in every community every year. There are too many properties and not enough tax assessors to make relying on tax assessment data reliable for market value pricing. Relying on tax assessments to value your home is not a good idea.

Offering incentives

Sometimes buyers need cash rather than a lower sales price in order to be able to afford your home. A sales price adjustment of $2,000-$5,000 won’t affect the buyer’s monthly payment tremendously with a 30 year mortgage. However, a cash incentive, such as “Seller Pays $3,000 towards Purchasers Closing Costs” may greatly affect the number of buyers who can afford your home. You can offer to pay some or all of a buyer's closing costs and discount points required by the buyer's lending institution. Keep in mind that various mortgage loan products limit the amount you can give the buyer in the form of cash incentives and if you add this amount to your sales price, you property will still need to appraise for the sales value. Check with your mortgage broker about maximum allowable seller contributions to purchaser’s closing costs with regard to particular mortgage loans.

Selling Bonuses

While we at Bloomkey^® are lukewarm on the subject of agent bonuses, we mention them because it’s something your competition may be doing, especially in a “buyers” market. Our feeling is that the good agents will show their buyer’s all of the available properties that meet their criteria and that your compensation, as long as it’s competitive, should be incentive enough to show and sell your home. However, experience and human nature tell us that, if someone stands to make more selling one home than another, they’re may be more likely to show that property first and perhaps push the benefits of buying that one over another. The fact is that in competitive or “buyer markets”, a cash incentive or bonus (in addition to the amount you’ve already agreed to pay a real estate broker or agent who brings you an acceptable contract) may make a difference in whether or not your property gets agent showings. Let Bloomkey^® customer service know if you plan to offer an agent bonus and we will include it with your MLS information for agents to see.

Net Proceeds

An important aspect of pricing your home is knowing what your proceeds will be after the expenses of the sale have been deducted and credits or prorations have been given. Your net proceeds are the portion of the equity in your home that’s your’s to keep and the key reason for selling your home with Bloomkey^®! Items included in the Net Proceeds calculation for the sale of real estate include such items as mortgage loan and equity line payoff and payoff penalties (if any) , real estate commission (if any), deed preparation and attorney fees, termite or pest inspection and repairs (if any), transfer taxes, recording fees, oil and tax prorations, buyer closing costs if paid by the seller, any delinquent taxes or homeowner’s association dues, home warranty (if paid by seller), mortgage loan interest due for the month up until the closing date. Seller paid closing costs vary by locality and may also include such items as title insurance and other fees. Check with your real estate attorney to be sure you’ve included all of the necessary items in your calculations.

CLICK HERE for a Seller's Net Calculator

Online Electronic Appraisal

Excerpted from the RealtyThrift HomeSelling Guide available at: www.Bloomkey.com/store

back to top