There are essential three categories of comparable homes that you should use to help determine the value of your home. The first category is comparable homes that are currently on the market (i.e. available to purchase). This category represents the competition for your home. There are likely several homes in this category that potential buyers will cross-shop while they are considering your home.
The second category of comparable homes to consider is homes that have recently sold (i.e. within the last year). This category represents what buyers were (and hopefully still are) willing to pay for a home that is comparable to yours.
The third category of comparable homes to consider in your CMA is homes that were for sale but did NOT sell. Real estate agents often refer to these homes as “expired listings”. More often than not, homes that do not sell are overpriced. Therefore, this category represents what buyers were NOT willing to pay for a home comparable to yours.
Once the value of your home has been determined, you can decide on an offering price that will achieve your goals. Generally, the price should not exceed the value by more than 5% or potential buyers may not even make offers. Naturally, if you want to sell quickly your asking price should be very near the value.
The following are a few things to keep in mind about pricing:
- Realistic pricing will achieve maximum price in a reasonable time.
- You cost or profit desire is irrelevant; the market determines price.
- The costs of improvements are almost always more than the added value.
- Houses that remain on the market for a long time do not get shown.
- A house that is priced right from the beginning achieves the highest proceeds.
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