Pricing Your Home

realprice estimate

RealDirect's Real Price estimate can help you determine the proper price range for your home.

When considering whether to use a real estate agent or sell by owner, a common deciding factor is seller concern over determining the right asking price for their home. Sentimental value does not translate in any way to market value and sellers can struggle with pricing a property at fair market value without emotion involved. Additionally, sellers do not necessarily have easy access to all of the same data about comparable listings as an agent would have, nor have they seen all of the comparable properties on the market. The fear among sellers is that if a property is priced too high it won’t sell, but if it’s priced too low, money could be left on the table. Finding the right price for a property in light of all current market trends and conditions can be a daunting task for sellers who might like to list by owner, but armed with the right knowledge and tools pricing at fair market value doesn’t have to be rocket science.

The number one metric for figuring out the value of  a property is comparable listing data. This means collecting data from listings that have closed within the last six months which would be considered comparable. Ideally, they would be similar units within the same building. If this is not possible, then it should be listings located in close proximity (within a few blocks) in similar building types with similar amenities and unit square footage. It’s important to make an apples to apples comparison.  An apartment in a full-service hi-rise, should be compared to other full-service hi-rise sales. Brownstones should be compared to brownstones, walk-ups to walk-ups, and so on. It’s important to look at closed listings as opposed to active, as property owners can ask anything they want for their real estate, that doesn’t mean it’s priced well or going to sell.

When looking at comps, choose units where the square footage is not more than ten percent higher or lower than that of unit being priced. If an apartment is 800 s.f. comps should come from units in the building or neighborhood ranging no smaller than 720 s.f. and no larger than 880 s.f. Location within the building is another important factor. Accurate pricing cannot be determined by comparing a ground floor unit to a unit on a high floor or a quiet unit at the rear of the building with an apartment overwhelmed by street noise. That said, comparable sales don’t have to be identical to property in question. Pricing should be adjusted for things like upgrades in the unit or special features not found in similar spaces. If you’re not sure how an apartment holds up compared to others in the area, walk through open houses or schedule showings to get a first-hand look at what else is available and how it’s priced.

Sellers may also want to consider having an independent appraisal done (about $250-300 dollars) to gauge how a bank will value the property. An inspection can be helpful in pointing out any flaws or issues that buyers will find before closing, and will allow the seller to correct problems before even going to market.

After looking at comps and getting a concrete idea of fair market value, sellers should price the property under a whole thousand dollar mark ($774,900 instead of $775,000 for example) to increase likelihood of showing up when buyers search for properties within a specific price range. Sellers should also go into the listing process with an idea of how long they’re willing to sit on the market. The bulk of interest and excitement for a new property comes within the first three weeks of listing, so sellers should go out with a price that will get the property sold or be prepared to sit on the market for a longer period of time and face possible future price reductions. Finally, price with an eye to current market conditions. If the market has recently switched from a buyer’s market to a seller’s market, sellers can expect to price slightly higher than recent comps, and vice-versa in a strong buyer’s market. Look into how many days on market and price reductions similar properties faced and prepare accordingly.

For help pricing a property at fair market value, fill out our Real Price profile and we’ll look at comparable sale data to provide you with a customized price recommendation.

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