Home may be where the heart is, but emotions can stand in the way of sound decision making when it comes to pricing your home for the market.
In fact, emotional attachment can be one of the biggest hurdles to accepting a professional's expert opinion of your home's value. All those decorating choices you've made over the years can seem like actual home improvements when you're ready to list. The memories you have of raising your family can convince you that your home is exceptional compared to the others on the block.
The problem, of course, is that letting your emotions drive your decision when it comes to pricing your home is likely to result in an overpriced listing that ends up languishing on the market, while those "less exceptional" homes in the neighborhood go under contract.
The other common way sellers let their personal feelings get in the way of pricing their home is in pricing it based on what they hope or need to clear from the sale. Starting with that number, they work backward to come up with a sale price, taking into account estimates for the real estate commission and other costs. Like other ways emotions enter into the picture, arriving at a price in this manner ignores the actual value of your home.
Your real estate agent may consider several factors when developing a recommended listing price for your home. Here are three you can expect them to consider:
1. Your need for a quick sale. Although this factor won't always figure into the equation when advising on a list price, circumstances like job relocation, divorce or financial stress may mean a homeowner needs a fast sale. In such cases, closing quickly may be a greater priority than getting maximum dollar. Your agent will discuss how this can factor could impact pricing your home.
2. Local conditions. Despite all the factors at play, real estate is still a function of supply and demand. In many areas of the country, inventories remain tight, which has caused housing prices to rise. Your agent should be an expert in local real estate market conditions, with an understanding of local inventories and demand. There are also economic differences between neighborhoods within the same metro area. While another property may be only a short distance from yours, the market conditions and neighborhood desirability among buyers could be vastly different, making the property much less valuable as a comparable property.
3. Results of a comparative market analysis (CMA). More than any other home pricing tool, an expertly done comparative market analysis will provide you with an accurate representation of your home's value. Today's gents have access to technology that provides them with a wealth of detailed data and the ability to analyze it using a number of factors. At the core of the analysis is the list and selling prices of comparable homes on the market or recently sold.
Your agent will only look at properties within a given radius of your home and of similar square footage, number of bedrooms and baths, as well as other factors that can affect buyer interest, such as garage space, basements, lot size and more. Once your agent has identified enough comparable properties, he or she will analyze them to come up with a baseline for your home's worth.
Unless you're selling a property you've never inhabited, selling your home is an emotional process. There's really no getting around that. The key is not allowing those emotions to get in the way of sound judgement. Hiring a real estate agent to sell your home provides you with a professional's expert opinion of your home's market value based on true market factors. Take advantage of that expertise when settling on a listing price for your home.