Monday, March 16, 2009

How To Price Your Home

In another helpful post on her blog, Jennifer Ames, top-producing agent at Coldwell Banker, reveals how she helps clients set prices for their homes. Some excerpts:

The most effective strategy: price slightly below the market so your home is the “best in its class.”

When evaluating a home’s market value, we consider the following factors:

1. Availability and pricing of similar properties - Is the home unique or are there many like it for sale? If there are others for sale, how do they compare? What would it cost to get those homes to the same condition as yours, and vice versa?

2. Condition - Unless it is a unique property, buyers in today’s market will discount the value of a home that requires more than simple cosmetic work. On the other hand, a home that offers popular amenities and is tastefully decorated will stand out among the competition.

3. Utility of Floor Plan - When we value a property, we look at the utility of the floor plan. For example, a deck can be a plus, but less so if it is only accessible by walking through the master bedroom. Also, a kitchen with a large pantry would have more appeal than a kitchen with minimal storage.

4. Location - This used to be the single most critical criteria in evaluating home values, but as our city grew and neighborhood boundaries blurred with new development popping up all over, buyers were more willing to sacrifice location for value. Still, there are certain factors (like being near an El track, a bar or on a busy street) that will negatively impact market value. Likewise, certain locations still command a premium.

Among factors irrelevant to market value: How much you paid for the property. How much you spent improving it. How much you owe against it (mortgages and/or equity lines). The amount you hope or need to get from the sale.

For more excellent tips, including Jenny's explanations of why testing the waters with your price doesn’t work, visit her blog.

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