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When pricing your home to sell, how do you find that sweet spot? Not too low that you’re losing serious money. Not too high that buyers are turned off. Somewhere in the middle is that ‘just right’ price that balances your expectations with those of the buyer. Here’s how to find it.
Know if it’s a buyers’ or sellers’ market
In a sellers’ market, the demand for property exceeds supply. With buyers competing against each other to purchase a home, you have more wriggle room to up your sale price.
In a buyers’ market, there are more homes on the market than buyers. If your price is too high, you run the risk that your home will be overlooked and sit on the market longer. Buyers might perceive the delay as a sign that you’re asking too much.
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Compare to recently sold homes
Look at what similar properties have sold for in your area in the last three to six months. Signs that a property is comparable to yours:
- it has an equal number of bedrooms and bathrooms
- the square footage and age are similar
- it has a similar number of amenities like an attached garage and master suite.
There are plenty of online property websites that can help with comparable sales and suburb performance research. Type ‘online property estimate’ or ‘property data reports’ into your search engine and take your pick.
When you’re sentimentally attached to your home, it’s tempting to dismiss these price comparisons because you think you have a superior property. The problem is that you’re effectively waiting for someone just like you to come along – who can see the property through your eyes. Talk about narrowing the field of potential buyers!
Use more than one source for property valuation
To guard against agents who overestimate your property’s value to secure your listing, always request evidence.
Your real estate agent will recommend a sales price based on their market appraisal. To guard against agents who overestimate your property’s value to secure your listing, always request evidence of what they are basing their price on. Get them to show you the list of comparable homes they have used, and ask them to explain how these prices fit within the current state of the market. Also, compare the price estimates of three or more agents to see how they stack up.
Another viable research source for getting a rough idea of property value is an online valuation. These are computer-generated predictive estimates that look for patterns in the latest market data using statistical analysis.
Some sellers choose to commission a property valuation by a qualified, experienced valuer. An independent valuation is a legally binding document that states a property’s value based on the valuer’s impartial research of the property combined with sales data, predictions and calculations. It can be useful in uncertain markets or as a tool for negotiating with buyers.
Be realistic about how much renovation spending you can recover
Overcapitalisation is a real concern when renovating or extending your home. There’s a fine line between adding value to your property and spending more than you will ever recoup in the sales price.
Discovering renovation surprises like faulty wiring or termites can easily tip your budget into the red. So too can overspending on high-end fixtures and fittings. When it comes time to sell your home, don’t expect to include your renovation costs in the calculations to determine the list price. Sellers who make money from renovation have usually purchased the right property at the right price in a suburb that people want to live in. Paying too much money for the property at the outset makes it more difficult to sell at a profit.
- Useful reading: Renovation Budget Blowout – How to Avoid
Have any questions about how your mortgage is affected by moving homes? Or how to finance a new purchase? Your local Yellow Brick Road mortgage broker would love to help; give us a call.