STEP 1: Determine the Current Market Value of Your Home
One of the biggest issues we see with “For Sale By Owner” home sellers is the inability to correctly price their home. The average home owner is simply not trained to determine the current market value of a property. Another problem is that most home owners are too close to their home emotionally. They play a comparison game, pricing their home higher than the one for sale down the street they believe to be less desirable.
Do it Yourself Method
At one time, the information to determine the market value of a home was only available to Realtors. Today, the amount of public information available online is making it easier and easier for home owners to perform this task on their own. Home sales are public information available on websites such as Homes.com, Trulia.com, and Zillow.com. In
Sellers can also use current listings on the market as an additional tool to gauge the accuracy of their valuation. Browse through local Real Estate websites and find a comparative list of homes with similar characteristics such as the year it was built, square footage, number of bedrooms and bathrooms, location and other amenities. Note the differences between your home and the comparable homes, adjusting the valuation of your home accordingly.
The very best way to establish the current market value of a home is to use a Certified Home Appraiser. Yes, this is even better than receiving a Comparative Market Analysis (CMA) from a local Real Estate Agent. Here’s why. A CMA is used by Realtors as a powerful marketing tool to get listings. Buy offering a free CMA, Realtors have an opportunity to meet with prospective clients to sell their Realtor services. Rather than pricing a home based on facts alone, Realtors may inflate the value of a home to get the listing or underrate the value to sell it fast. Home buyers respect the opinion of a neutral 3rd party valuation. When a buyer inquires about how the asking price was determined, home sellers earn instant credibility when they can hand the buyer a Certified Appraisal to review.
STEP 2: Determine Your Asking Price
Determining the current market value of your home was the first step. The next step is to determine your asking price. Your options are to choose an asking price at the exact appraised value, choose an asking price a small percentage above the appraised value or a priced slightly below appraised value. A summary of each option is provided below.
Ask the Exact Appraised Value
If your goal is to receive top dollar for your home and money is one of your primary motivations, then you can choose an asking price at the exact appraised value. You paid to have a professional determined the value of your home so that’s what a buyer should be willing to pay for it. If you receive this amount, you will have saved the total amount of paying a commission less your out of pocket expenses. The downside to an asking price at the appraised value is that you will be competing head to head with other similar houses on the market.
Ask a Small Percentage Above Appraised Value
If, like above, receiving top dollar is one of your primary motivations, but you want a little “wiggle room”, then you may want to choose an asking price slightly above the appraised value. Understanding that properties on
This gives you a little room to “barter”, but gives the home buyer a satisfaction factor to not pay the full asking amount. With the appraisal laying right in front of the buyer it's kind of difficult for the buyer to expect you to drop your price more than 3% of what your asking. The downside to pricing your home slightly above the appraised value is that you’re now either head to head or slightly above the asking amount of your competition.