How Do I Set an Asking Price for My Home?
To arrive at the right listing price, start by researching the competition. That’s where an agent can help. He or she will prepare a Comparative Market Analysis of comparable homes—“comps”—detailing the original listing price, how much the home actually sold for, and how long it was on the market. (You can find some of this information yourself at leading real estate sites like Zillow and Trulia.) The last three months of sales are the most relevant, but look back at least a year to understand how prices are trending.
Then see how your house stacks up against neighboring properties. Drive by homes that have recently sold, and pop into local open houses so you can get a sense of home features in your area. That will help you to see your home’s plusses and minuses through a buyer’s eyes (and pocketbook).
Pricing is less of a challenge in hot markets where lots of buyers are competing for scarce inventory, but even then, you want to guard against overreaching. Better to price in line with other properties—and maybe attract multiple bids—than aim too high and have to cut. In markets where prices are falling, underprice by 3%-5% to get ahead of the curve.
If you put it on the market and don’t get any interest in the first few weeks, that’s a sign you’ve priced too high. Cut your ask by 5%, says Phoenix agent Greg Markov. “If you’ve marketed well and gotten the proper exposure, the first two weeks is where the action should happen,” he says.
If you want an objective assessment, or you’re selling without an agent, spend $400-$500 for appraisal. A buyer will have the property appraised as part of the mortgage process, but bringing in your own expert first will give you a clearer sense of what a lender thinks your home is worth.