Selling your home? Make sure the price is right

PETER DAVIDSON (bankrate.com)

The key to selling your home within a reasonable amount of time could very well be the price tag you hang on it _ whether you're in a buyer's market or a seller's market, and whether you use an agent or sell it yourself.

Setting the correct asking price is the most important step in the process of selling your home," says William F. Supple Jr., author of "How to Sell Your Own Home" and publisher of "Picket Fences," a monthly magazine for homeowners.

Homes that are overpriced don't sell, says Supple, and they scare away potential buyers.

"Homebuyers look at houses in ranges," explains Supple. "Set a price that's too high and they won't even bother to take a look at it. Buyers are immersed in the market. They've seen lots of properties and probably know the reasonable price ranges for properties they are interested in. Homes that are overpriced will generate no offers, no negotiations, no sale," says Supple.

They will, however, drive potential buyers into the arms of the competition _ which means your property could sit unsold for a long period of time and become "shopworn," leading agents and buyers to conclude that something must be wrong with the property.

Set your price too low, on the other hand, and you'll leave a pile of money on the table.

So how can you figure out the right asking price? Fortunately there are resources available to you that will help you determine the fair market value for your home, which is what a buyer is willing to pay you and you, the seller, are willing to accept.

One of them is a comparative market analysis, a written study that compares your house to others like it in your area that sold recently or are on the market.

A comparative market analysis will give you give you factual information about the houses: Number of bedrooms and baths, square footage, such amenities as fireplaces and swimming pools, as well as the listing prices and the sold prices. Getting the analysis is very easy: call a real estate agent, even if you are planning to sell your home on your own. The agent will happily come to your home and generate a comparative market analysis and suggested listing price for you in the hope of getting the listing eventually.

"Homeowners don't spend enough time studying how to price their home," says Ilyce R. Glink, author of "50 Simple Steps You Can Take to Sell Your Home Faster and for More Money in Any Market." She recommends getting a market analysis from three different agents who do the most business in your neighborhood. They will be most familiar with details of homes in the area that have been marketed successfully or unsuccessfully and what impact those details had.

The comparative market analysis, however, can be incomplete, dated and may not take into account things like curb appeal or a great view. That's why some experts recommend getting a professional appraisal as well. Besides, says Supple, some real estate agents may inflate the value of your home just to get the listing.

A professional appraisal is a good especially if you're selling without a broker. It may cost you $300 or more, but it's a good investment. If your eventual buyer gets a mortgage the lender will require one anyway, so you may as well get an accurate idea of the maximum amount lenders will be willing to finance.

The appraiser will inspect your property thoroughly, noting its features, construction and amenities. Then will come a market analysis, comparing your property to recent sales in your area.

The written report will identify the appraised value. Remember _ that's not the same as "market value," which Supple says "is the highest price that a property will bring in an open and competitive market."

But it gives you an excellent starting point for pricing your home. "In a seller's market, a good rule of thumb is to add 10 to 15 percent on to the appraised value," says Supple. "In a buyer's market, add 2 to 3 percent."