The one important decision for a seller is to have your home priced correctly, making it attractive to buyers. Calculating the price is an art using market data, real estate information and good instinct to determine the value of your home within the current market. For most sellers doing this transaction on your own involves making mistakes from overpricing to underpricing.
Although there is a theory of pricing low to attract buyers, it’s not in the best interest for either the seller or the buyer. This type of strategy creates a minefield for negotiations, which don’t always work in the favor of either party. There’s a better strategy considering supply and demand, where low inventories tend to drive the price up, it doesn’t mean buyers get a high priced home for a lower cost. Low inventories tend to hold higher prices on the current market, and it becomes a seller’s market, especially if the seller can afford to hold the listed price. Buyers are be guided by Realtors on what’s a fair value of the home and what the current buyers are willing to pay.
The Santa Clara MLS in Santa Clara, California shows a median sales price for homes listed at $900,000 as of January 2016 with an appreciation of 68 percent over the last 5 years. The average cost per square foot for a home in Santa Clara today is $656, more than 20 percent compared to this same time last year. The market is doing well and the list price for homes are consistent, preparing for spring, one of the busiest seasons for selling homes.
1. Comparative Market Analysis
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CMA provides the information of listing and sales for similar homes like yours in the neighborhood, usually over the past 6 months. Most reports have specific proximity to your community, and you can ask for a wider search if you’re interested. Comps are based on similar properties in the same vicinity determining the home’s market value.
2. Selling Mistakes
Sellers need to compare square footage, location, age and the condition of the home for a qualified comparison in determining the list price. Keep track of the Santa Clara MLS listings and homes selling in the neighborhood; you could see a variable of 10 to 15 percent on pricing. If so there’s usually a reason for the difference; it may be renovations, adding value to home or necessary repairs the buyer agreed to accept as part of the sales negotiations.
3. Comps
Using the past six months of information for sold homes gives you a good idea of the number of days the home was on the market and the asking price. Take a look at the Santa Clara MLS listed price and the final sales price. Check the listings for sold or relisted, sellers tend to make a mistake on pricing assuming a house was purchased when it’s no longer listed. It may be relisted. Also consider any withdrawals or expired listings – it happens. Look at the patterns in the market for these homes, what do they share? You need to know why these homes did not sell, if it’s location, size, condition, pricing or poor marketing efforts. The more you know ahead of time the better results in selling your own home. This is valuable information to be able to price your home correctly for the market.
4. Market Strategies
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In an active market you want to consider the most recent comparable sale in your neighborhood for your initial price listing. If the market trends shift, you can adjust, just try to stay within realistic changes. A recent change in median home sales price during the last quarter of 2015 was .8 percent, consider the patterns between a 6 month period if there’s been a significant change adjust, if not stay with your listed price. It’s not unusual to see 2 percent decline one week and a 1 percent increase the following week.
5. Market Conditions
In a seller’s market the inventory for homes is typically low, allowing the seller to increase the sale price. Don’t get overly excited, there are other factors involved with selling your home, which have to do with the buyer’s preferences, making 10 to 20 percent difference in the final sale of the home. Here’s an example: 3 similar homes located on the same street are priced at a 5 percent difference for each home. Why?
Look at the comps, is it the location, such as corner lot with a bigger yard, updated kitchen or bath or energy saving devices with low maintenance requirements.
6. Take a Tour
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If you’ve gotten the comps and still not sure about how to price your home, take a tour and visit the homes listed in the Santa Clara MLS. Go see what buyers are looking at and what attracts you as a buyer from the inside out and the listed price. Put yourself in the buyer’s shoes. These are your competition, now compare your home and create an inviting place to attract buyers to your home and entice them to make an offer and purchase.
7. Square Foot Cost
This is one area that’s confusing for sellers and getting an appraisal helps to clarify the size of your home. The home’s square footage is the living space; it doesn’t include the garage or storage areas. But these additional areas make a difference in the listed price. When a seller accepts the offer, the buyer’s lender will ask for an appraisal and square footage needs to be accurate.
If you’re still stuck on how to price, having a Realtor to answer questions and provide some guidance can help. Movoto’s seller services program is designed to work with the seller and offer all of the tools and information you need for a successful sale.
