The price per square foot method is often used to establish the price of a home, but there are other factors to keep in mind.
1. What is the trend; is it a buyer's market or a seller's market?In a seller's market, a seller can expect a good price for his property, because the supply of homes can not keep up with demand.
Obviously, a buyer’s market is just the opposite of a seller’s market. It occurs when the supply of homes outweighs the demand. This doesn’t mean you won’t be able to sell your home for a reasonable price, but it does mean you will have to be more competitive. This is especially true if the economy is not seen as good, because even if interest rates are low, consumers tend to postpone making large purchases due to issues like fear of being laid off.
In a buyer’s market, you need to make the deal as attractive as possible. You should be willing to slightly reduce the price or make other concessions such as paying closing costs. Or, you may want to wait to sell until the market begins to change, if possible.
2. How are comparable homes in the area priced?
To determine the value of your home, you will need to establish what is happening with similar homes in your area. This will give you a starting point. You’ll need to figure out if your home is worth more, less, or about the same as comparable properties.
You’ll need to examine the condition of other homes and learn whether yours is in better, worse, or similar shape. Perhaps your home offers more square footage, an extra bathroom, a newer roof, a larger yard. Perhaps yours has been better maintained, or you’ve recently painted, installed new carpeting, or improved the landscaping. Or, maybe your home offers fewer of the above items than comparable homes. These things add to or subtract from the value of your home and must be taken into consideration.
3. Should I have my home appraised?
An appraisal is a great help in determining the fair market value of your home, and having one done has become standard procedure in the world of real estate. Having your home appraised is of benefit to you for many reasons. You may discover that your home has been unfairly assessed and therefore the property taxes should be lowered. Lower property taxes are a good incentive for a buyer.
A professional appraiser may also help you avoid making costly mistakes. If you are considering remodeling a bathroom before putting your home on the market, an appraiser will let you know if the investment will prove valuable. While most improvements will add to the value of your home, the effort and cost of a remodeling project may or may not be justifiably reflected in the sales price.
You may also learn that your home is worth far more than comparable homes in your neighborhood due to any number of things, such as more square footage or better condition.
4. Is my home buyer friendly?
When a prospective buyer enters your home, you want her to feel comfortable, to make herself at home. Also, remember that most buyers are looking for homes in “move in” condition. If not, they are certainly looking for a bargain if they have to do some of the work.
Make sure that clutter is minimized and space is maximized. Be sure high traffic areas are open and have good flow. Even though (in most cases) your furniture will be moving out with you, the buyer likes to picture his or her own furniture in your space. If you have an awkward arrangement, she may feel that the room doesn’t flow well, and may feel that her furniture would not fit comfortably either.
Everything should be sparkling clean and your home should smell nice. You can use fabric refreshers, room fresheners, or scented candles as long as they are not overpowering. Many realtors suggest throwing a frozen pie or a pan of sliced apples and cinnamon in the oven. The scent of a baking pie creates warmth and a sense of hominess.
A gallon or two of paint can go a long way toward making your home seem in move in condition. If you have chartreuse walls in one room, paint them a neutral color. Buyers may not share your love of chartreuse and may not feel like repainting before moving in. Even if they don’t mind painting, they will expect to be compensated for it, and they will be silently deducting from the amount they intend to offer.
It’s also a good idea to open drapes and blinds, turn on lights, or light candles. You want your home to appear as bright and airy as possible.
5. Are there repairs that I can complete myself or have done inexpensively, which will ultimately increase the value of my home?
You may be unwittingly knocking thousands of dollars off the purchase price by leaving minor repairs unfinished. A couple of hundred dollars and a couple of hours of work may significantly affect the final price.
For example: A crack in the wall or ceiling may cause the buyer to think there is other damage. They may not want to take the chance and may go on to the next house on the list. Or, they may decide that since they have to do such work, they will lower the amount they intend to offer. Taping, mudding, sanding, and repainting the wall or ceiling is not expensive or difficult, but it will make a big difference when it comes to the bottom line.
6. Does my home have curb appeal?
Make sure the lawn is freshly cut and etched if needed. Seed any bare areas, and be sure the yard is free from debris and clutter. If your mailbox or house numbers are missing or are in disrepair these items are simple and inexpensive to fix. Little things make a big difference.
Have overgrown trees or shrubs trimmed, and make sure the entrance to the home is easy to see and welcoming. Many realtors suggest that even if you do nothing else to the exterior, you should at least apply a fresh coat of paint to the front door.
7. Have I included every “extra” in my price?
If you are including appliances, furniture, or window treatments in the sale of your home, or have made recent improvements and repairs, be sure you have covered all of these items in the sales price.
8. Have I (or has my agent) advertised enough?
Don’t cheat yourself out of offers by skimping on advertising. The more people that know your home is for sale, the better. This doesn’t just mean newspaper ads and market listings either. Word of mouth is an important form of advertisement. Tell everyone you know that your house is on the market.
Also consider having at least one open house. Some people are uncomfortable with this idea, but it gives buyers a chance to really check out your home in a more comfortable manner. They won’t feel funny about peeking in closets if other people are doing it too.
9. Do I really know how my home presents to other people?
It may not be easy to hear constructive criticism, especially about something as personal as your home, but it is best if you have an honest evaluation. Even if you have done everything on the list plus had an appraisal done, have a brutally honest friend or neighbor give you their opinion and tell you what stands out to them. Do not take what they say personally. Use this information to make your home more valuable.
Your fond memories and sentimental attachment to your home may keep you from recognizing things that others can plainly see. Be ready to hear things you don’t want to hear, but take the advice in the spirit in which it is intended.
10. How much are my closing costs, mortgage payoff, and other costs; have I priced my home sufficiently to include these items?
Many people, especially those whom have never sold a home before, do not realize the many different costs associated with selling their home. The buyer may ask you to pay down points (to lower their interest) or to pay the closing costs, or you may want to offer to do so to make purchasing your home a more attractive deal.
You also need to make sure you will have enough left to complete your mortgage payoff, if any, and to cover the realtor’s commission and any other costs. Be sure to speak to your lender and your realtor about any costs you are unsure of before setting a firm price, and especially before considering any offers.
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