The old saying in real estate is “location, location, location.” Although location is important, you should also be thinking “price, price, price.” Perhaps the most common question that sellers face is: “How much can I sell my house for?”
A persistent underproduction of housing has led to a housing shortage, helping to drive up prices. Not enough supply has meant that sellers could price their houses high and still sell. In fact, home prices increased by almost 17% in 2021 compared to 2020. And according to a recent survey, 83% of real estate agents expect these trends to continue into 2022, though a more balanced market may start to emerge in the second half of the year as interest rates rise.
Get help estimating your home’s value
One of the easiest tools that can help you estimate an appropriate price is an Automated Valuation Model (AVM). AVMs use a huge pool of data on factors like property and house size, geographical location, and price history. They then calculate an approximate home value using proprietary algorithms to give you an estimate.
For example, HomeLight’s Home Value Estimator uses property information you provide about your home’s details and condition, then compares that to local housing market data to deliver an accurate home value, and this can be a great starting point.
Work with a top agent to develop a strong pricing strategy
The best way to ensure that you’re setting the best price for your house sale is to work with a top agent. An expert real estate agent will perform a comparative market analysis (CMA) to establish a price that reflects the market, aspects of your home that AVMs don’t take into account, and aligns with your goals as the seller.
In real estate agent George Kypreos’s experience, knowing the seller’s goals is crucial in setting a price. If the seller’s goal is to make the most money possible from the sale, Kypreos advises that they should already know where they’re moving to give time to wait for the highest bidder rather than needing to rush the sale.
“The one mistake we’re finding that sellers make is they get excited about the equity and the amount of money they’re going to receive…when the home sells,” says Kypreos. If the seller doesn’t already have another home lined up, they need to search for a more patient buyer. “We might need some flexibility on closing time. We might need what we call a leaseback,” or a rent-back, in which the seller leases the house back from the buyer until their new home is ready.
Setting the right price for the right buyer is crucial to a successful sale — and the agent has to hit that target immediately. According to Kypreos, the first day on the market is the most important. In fact, Day One is “the most important presence on the market,” Kypreos explains. “It gets disseminated on lots of websites… so you have this one chance to have the right price and the right marketing campaign,” he says “If you miss too high and you start doing price reductions, it’s kind of a bad look for negotiating.”
In addition to aligning the price with your goals and optimizing it to attract potential buyers, a real estate agent will use their experience and market trend knowledge to incorporate other factors. In addition, setting an accurate price can help avoid an appraisal from coming in low and potentially disrupting your sale.
Factors that go into a CMA
To determine your listing price, an agent will perform a CMA, which takes several factors into account. Furthermore, an experienced agent will know how to balance the analysis with unique features of your home to best align with the pool of potential buyers. Here are a few elements that your CMA will look at:
1. Square footage
Your CMA will look at the gross living space of your house. Think bedrooms, bathrooms, and common areas like your kitchen, living room, and dining room. Depending on your zip code, you might even be able to include a finished basement or an indoor porch in your square footage!
2. Bedrooms and bathrooms
The number of bedrooms and bathrooms is one of the most basic statistics used to evaluate a house. Counting bedrooms can sometimes be tricky. That little alcove that you put your child’s crib in probably isn’t considered its own bedroom. And although you’re proud of your weekend project of putting up some insulated walls in your basement so your visiting family could have their own “guest room,” it would need to be built to specific standards to be able to be counted as a bedroom for listing purposes.
3. Lot size
Lot size is the amount of land your house sits on. Bigger properties can mean room for expansion, room for a pool, or privacy from neighbors.
To find your lot size, review the plat map that you received when you first purchased the property. Your local government offices might be able to help if your map has gone missing.
Some people are charmed by older houses with a lot of history, and others prefer new construction. Your CMA will use your house’s age as a point of comparison to recent sales in your area.
Back to that “location, location, location” mantra. Your house’s location matters for three different reasons:
- Home values vary depending on your state and county.
- Recent demand is greater in the suburbs, with 62% of online home views focusing on suburban areas.
- On a micro level, buyers will review information on your neighborhood for elements like, walkability, transportation, and proximity to amenities like highways, parks, and grocery stores.
Many homes could use a few repairs, but it doesn’t mean that they’re in poor condition. However, major issues like roof damage, electrical or plumbing issues, or a nonfunctional HVAC system will dramatically lower the price of your home.
Even if your house needs a lot of work, you can still sell without a complete overhaul. You just might have to get a little more creative and expand your profile of an ideal buyer.
If you really want to boost your house’s listing price, consider making a few upgrades that will increase the home’s value. A small investment now on new appliances or finishing your basement can really lead to high return on investment when you sell.
Strategies to justify a higher listing price
A top agent can develop a strategy that will help you list your house at a higher price. Depending on your geographical climate, your agent might take seasonality into account if your house will sell better in the summer rather than the winter. They’ll advise you on how to clean and stage the house, and even guide you on some small renovations.
Some easy renovations can increase the home’s value, so a little work now can pay off when you sell. And larger projects like installing a home office or refinishing hardwood floors can help you recover up to 147% of the renovation cost after the sale.
If you’re not up for a renovation, don’t stress. Kypreos tells his clients that maintenance and upkeep are more important. When a buyer expresses interest, it’s important to show that the house “is being maintained and there’s no distress,” he says. “We want to show the house is in good working order and the seller is maintaining the property.”
These strategies will help you answer that all-important question: How much should I sell my house for? When you partner with an expert real estate agent, you’ll give yourself the best chance at selling for top dollar. If you’re not sure where to start your search for a top agent, just answer a few questions in HomeLight’s Agent Finder. We can match you with an agent who specializes in your area and in your type of home.
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