Setting your asking price can be tricky in today's real estate market. Your listing price MUST be compelling. But how do we arrive at that magic number?
Your real estate agent will research the local market, and show you comparable properties (or “comps” for short). A good comparable is located close to your home. The size of the house, the size of the lot, and the type and age of the construction should all be similar to your home. To reflect current market conditions, a comp should be no more than six months old. Your agent will show you two types of comps - Active Listings and Sold Listings.
David S. Knox, a real estate guru, says, “Active properties – the ones for sale – represent the upper end of the price range. You wouldn’t expect to sell your home for more than what others are selling for today, assuming, of course, that these are similar to yours.
“The Solds represent the reality of the market. These are the most important numbers to use in determining market value. In a normal market, your asking price should be at the top of the Solds and at the bottom of those For Sale."
“There is a third category that your agent might research, depending upon the market. Those are the homes that did not sell [during] the listing term. These are called “Expired Listings” and represent the out-of-range price. If you price where the other homes expire, your home will remain unsold as well."
Like this expert, I recommend that you price your home in the strategic "sweet spot" between the Actives and the Solds. Check out the diagram above when setting your asking price.
1 Excerpted from Pricing Your Home to Sell by David S. Knox, ©2002 David Knox Productions, Inc.