Figuring Out How to Price Your House

If you’re thinking about putting your house on the market, you’re probably wondering how much it’s worth (or rather, how much you can get for it). Pricing your home accurately is extremely important- price it too high and it can end up sitting on the market for months; price it too low and you won’t get nearly as much money as your home is worth.

It’s true, figuring out how to price your house can be a tricky process; it’s not a “set-it-and-forget-it” procedure and it shouldn’t become a guessing game. But, with the guidance of your real estate agent, once you understand and gather all the necessary information, you can put a dollar figure together and feel comfortable with an appropriate asking price.

Determining How to Price Your House

Whether you plan to sell your home now or in ten years, knowing what your home is worth is critical to your finances. Since a home’s value fluctuates over time as neighborhoods change, it helps to keep a pulse on the market.

Market Value vs Assessed Value

Understanding the difference between market value and assessed value can be confusing, but basically boils down to knowing how much your home is currently worth on the market (market value) and how much it’s worth based on a percentage of the appraised value (assessed value).

Market value is influenced by other homes that have been recently sold in your area, the location of the home in relation to schools, and the future impact of construction for that area such as new roads, future retail, supply and demand in the local housing market, and, of course, the economy as it is today. The market value is often higher than the assessed value making it a favorable number for sellers and the price that is typically used for listing the property.

Use the Chase Home Value Estimator to get a free estimated market value of your home.

To establish your property’s assessed value, certain factors are taken into consideration such as being too close to a busy (and noisy) highway, any additions or improvements made to the home, age of property, quality of construction, and lot dimensions. Most states calculate assessed value at 80 percent to 90 percent of FMV, and then impose a 1 percent to 2 percent annual property tax on the assessed value.

Pricing Your House Under Market Value

Unless you’re selling in a high-demand, low-inventory market, it can be risky to list your home under market value. For some sellers, this strategy is meant to increase their odds of receiving multiple offers over the asking price. Beware, this strategy could backfire if priced too low and only one offer comes in.

However, if you’re in a hurry to sell, this might be a time to price your house below market value to generate a quicker sale.

Pricing Your House Over Market Value

Tempting as it may be, an over-inflated priced home will not compare favorably with other similarly priced homes. In most cases, overpriced homes will turn off potential buyers, at least not until the price has been reduced.

Even though for some, reducing the price is part of their strategy making buyers feel like they’re getting a deal. But beware, this can backfire with price-haggling nightmare and lead to a longer market time. Don’t do it.

Because once a home sits on the market too long, it starts to go stale and raise uneasy questions from potential buyers on why it hasn’t been sold yet.

Use a Trusted Realtor to Price Your House Correctly

When it comes to pricing your home correctly, setting the right asking price is key to your success (and hopefully a sweet profit). To find that sweet spot, start by using a trusted realtor. Realtors are your very own local market experts. Not only are they tapped into the pulse of your local housing market; spending hours checking out and comparing new listings in your area, they’re also aware of national real estate trends and can provide a comparative market analysis (CMA).

A CMA is a report that provides information (known as “comps”) about houses similar to yours (in size, age, amenities, and location) that are either on the market, have sold, or were listed but expired within a reasonably recent time period.

First impressions are everything when selling a home. Since studies show that the first two weeks on the market are the most crucial to your success, make sure your pricing helps you stand out – in a positive way.