Are you looking for How to Price Your Home for Sale?. Pricing a home effectively is the most critical step toward selling your home quickly and at a satisfactory price. Unlike an ounce of gold, a home doesn’t have a fixed value; instead, its value is defined by conditions that change constantly and sometimes rapidly, such as the health of the local real estate market, nationwide interest rate trends, and local crime rates.
Avoid common pricing mistakes and learn how to price your home for Sale strategically to attract buyers, sell quickly, and maximize your profit.
Fair Market Value
A home’s fair market value (FMV) is the price that the market determines it is worth at the time of sale—one that a buyer is willing to pay and a seller is willing to accept. The most effective way to price a home for a quick sale that satisfies both buyer and seller is to assess and approximate the home’s FMV and make that value the asking price.
How to Determine a Home’s Fair Market Value
The most effective way to determine a home’s FMV is to conduct a comparative market analysis (CMA), a side-by-side comparison of the prices and features of your home against those of recently sold or for-sale homes in your area. Usually, the CMA (Comparative Market Analysis) has two types of information prepared by your agent:
- Similar homes for sale in your area include homes listed in the last 3–6 months that are still available.
- Comparable homes sold in your area: This list usually includes houses sold within the past 6–12 months, though agents sometimes include data from as far back as two years.
Your agent’s CMA should include specific details about each property, such as its asking or selling price, location, square footage, number of bathrooms and bedrooms, exceptional amenities (stone fireplace, pool), and the cost per square foot.
Other Sources for Determining Your Home’s FMV
A detailed CMA (Comparative Market Analysis) usually helps you and your agent determine your home’s fair market value (FMV). If you want more information before setting a price, you can try these options:
Use online tools: Websites like Zillow and House Values provide free, quick FMV estimates based on your home’s location and sales history. Keep in mind these are rough estimates.
Hire an appraiser: A professional appraiser can give you an unbiased estimate of your home’s FMV. This costs $250–500 and takes a few hours.
Visit open houses: Check out open houses in your area to compare homes like yours, inside and out.
How to Set the Right Price
Your asking price should not necessarily be equal to your FMV. Instead, use your FMV as a starting point, adjusting your asking price up or down based on the following:
- Urgency: If you must move as soon as possible, consider lowering your asking price 10–15% below your home’s FMV. The lower price will likely attract more buyers and expedite the sale.
- Local inventory: Ask your agent to provide historical data on the inventory of unsold homes in your area. If there are too many homes for sale (a buyer’s market), it’s a good idea to set your asking price 10–15% below the Fair Market Value (FMV) to attract buyers looking for a good deal.
Though in a few cases, it might make sense to set your asking price above the FMV (as you would in an extreme seller’s market), that plan usually backfires. Since most buyers work with agents, they can access the same FMV data you and your agent consult.
Buyers can quickly notice if a home is overpriced and usually avoid those listings.
. Frustrated sellers gradually ratcheted their prices to align with the FMV, but in that time, new listings overshadowed the languishing mispriced listings.
To make matters worse, sellers who misprice their homes lose negotiating power with buyers who know how long the home has been idling. In short, it’s best not to set your asking price above your home’s FMV.
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