Determining Your Price
Determining Your Selling Price
If you are selling your home by private treaty, the most important decision you will need to make is what price to put it to the market.
Setting a realistic price will ensure you obtain your asking price (or close to it) and also conduct the sale promptly. When determining a sound price you should
Arrange an Appraisal
An appraisal is performed when a Real Estate Agent inspects your property and estimates it's value. Many Real Estate Agents will conduct free appraisals in the hope that you will choose them as your agent.
You may be tempted to select the Real Estate Agent that recommends the highest price for your property. However, be wary of agents who put high prices on properties simply to gain your business; advertising your house at a price way over the market value of the property can be detrimental to it's sale in the long term.
Prior to appraisal, the majority of sellers will have a price expectation that is possible 5% to 10% above the realistic market level. Bear this in mind when assessing whether an agent is over-pricing your property.
Examine a Comparative Market Analysis
Determining what other people have been willing to pay over recent months for properties similar to yours (i.e. similar condition, style and locality) is another important factor to consider when setting your price.
Your Real Estate Agent should have access to this information. Often referred to as a Comparative Market Analysis, it will also include data on nearby properties that have failed to sell, together with their listing prices. Ask your Real Estate Agent to review the analysis to support the price he recommends for your property.
Consider Market Conditions
A Comparative Market Analysis will often include data on the number of days each comparable property was on the market prior to being sold.
When the property market is booming and property prices are on the increase, properties can sell in only a few days. Alternatively, if the market is slow, the average time for properties to be on the market can be several months. The prevailing exchange rate can also have a dramatic effect on the quickness of a sale. When the Asian economic crisis hit and the Thai Baht drifted out to 55 to the US Dollar, properties in Thailand were snapped up at an amazing rate, being such good value in foreign currency terms.
Your Real Estate Agent will be able to tell you the strength of the market in your area, and whether it is experiencing a Buyer's Market (i.e. slow period) or a Seller's Market (i.e. boom).
In a buyer's market you may need to price conservatively in order to sell, while in a seller's market you are more likely to get a price which exceeds expectations and you can therefore set your price accordingly.
Estimate your Net Gain
When you are satisfied that you can reasonably estimate the market value of your property, you can then assess the net proceeds you are likely to receive if you sell.
To do this, you will need to determine the fees and costs associated with the sale of your property. These expenses should then be subtracted from your estimated sales price. Some of the costs and expenses to be considered are:
- The Real Estate Agent's commission,
- Any Marketing/Advertising fees,
- Lawyers fees and settlement costs,
- Any improvement and repair costs.