Fsbo

When buying a home for the first time it is most likely the biggest financial decision you have made thus far. Now you are at a point when selling your home, for what ever reason, is just as big of a financial decision as buying. No matter what the reason for selling your home you still want to get as much of your investment back as possible. There are 3 key points to consider when pricing your home, market conditions, targeting, and price.

1. Recognize that housing markets are local.

Home prices are like the weather — very different in different areas. In addition, demand will change depending on the price range and even the neighborhood. What you need to know: What’s the demand for a house like yours in your area?

Look at comparables for similar houses. Study prices and sales for one year ago, six months ago, three months ago and current numbers. What are the trends? Are prices going up or down — and by how much? How many days are homes staying on the market? If they are on the market longer, how much of that could be seasonal? In many areas, spring and summer are the busy seasons.

Pay special attention to the delta between the list price and the sales price. That is, look for a meaningful relationship between list price and sales price. Perhaps most homes are selling for 5 percent less than the list price.

If you’re not using a real estate agent, it’s especially important to use the Internet, visit open houses in your area and study home sales in your Sunday paper. But you also need to realize that the paperwork alone only tells part of the story. While sales and prices are public, many times seller concessions are not.

2. Analyze who is buying and selling in your market.

What’s your competition? Who are the buyers, and why are they shopping?

Do you live in an area like Phoenix, a growing market with people coming in. Or are you living in an area that doesn’t attract a lot of new residents, where many shoppers are bottom fishers who don’t have to buy but are looking to pick up a bargain.

Are you competing against a flood of new houses from builders eager to sell, or are you selling a newer home in an area where most of the housing stock is older?

3. Consider strategic pricing.

Here’s how it works: If prices in your area are dropping 1 percent each month, and you want to sell within the next three months, you take 3 percent off your price right off the bat. So if you were going to put your home on the market for $400,000, you set the price at roughly $388,000.

The upside: You’ll have the competitive edge over the guy who’s dropping his price every month, without the air of desperation. Plus, in a market where prices are falling, you’ll make more money if you sell quickly.

The downside: Predicting the market is a tough call, even for the pros. And it’s really difficult to raise the price if your market starts to rebound.

This entry was posted on Monday, July 28th, 2008 at 11:35 am and is filed under FSBO. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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