Reader Question: We are planning to sell our home. In researching the subject, the standard advice is to call a real estate agent. We get that, but from a potential seller’s point of view, that is very simplistic advice. What do you suggest someone do when pricing a home for sale?
Monty’s Answer: You are asking about what is likely your largest single investment. We take time to shop at the grocery store to save pennies on items that cost very little money when compared to your home. Still, many people do not want to invest any time determining how to protect the equity in their homes when the time comes to move on. “Call a real estate agent” is standard advice, and many home sellers do just that, but it is not the first thing you should do. Here is a how-to list to consider:
- What affects the timing of a sale? Your home’s condition, accessibility to view, appeal, and market activity in your price range, and in your neighborhood, are the essential factors. How you price your home may determine how long it takes to sell. Do you want to get top dollar, or do you want to be the first to sell? The timing you want may depend on your circumstances.
- Learn the facts about the last 90 day market in your neighborhood. Basic statistics about real estate are very misleading. Here are the facts you need (in writing) from the agents: a.)The number of new listings expected to come on the market 90 days after you list compared to the corresponding 90 day period one year ago. b.) Active listings currently for sale. c.) The number of listings expired unsold. d.) The number of pending contracts. e.) The number of closed sales in your price range and your neighborhood.
- Get your home inspected before you establish a price. You don’t want to discover a problem after you and a buyer have agreed to a price. Fix components beforehand and eliminate the second negotiation.
- Take yourself out of the emotional attachment mode and look at your home objectively. A buyer isn’t considering your memories when they look at your home.
- Know what questions to ask a real estate agent (http://bit.ly/2cnpI1v) in an interview. The interview is when you ask the market questions in point #2 above. You may be shocked at how different the answers will be.
- Do not bias someone evaluating your home by sharing what price you think your home is worth. Let them decide independently, without you influencing them.
- Understand the motivation of anyone offering an opinion of value. One thing an agent has in mind is eliminating their competition. Telling you what you want to hear may accomplish it.
- Take responsibility for understanding pricing – do not depend solely on any one person’s opinion. It is not uncommon for these opinions to vary by wide margins, so you must understand how they reached their conclusions to evaluate their opinion.
- Now, seek three informed opinions of value.
Invest the time required to follow this path. You will likely keep considerably more of your equity than you saved pricing groceries each week over the past 20 years.