The deciding factors to determine how to price your home
When deciding how to price your home, a home seller must remember that their home is competing in the real estate market with other similar homes. Home buyers have choices and your home will be compared to other homes in a similar price range. The graphic shows an order of importance of some factors that go into how to price your home and determing fair market value. The order of importance can vary from home to home and each situation, but in general you will find the order of importance to be fairly accurate.
Location of your home
It should go without saying that you can not compare homes in one town to homes in another town. You want to stay with-in your community. Also remember with-in a town you have different areas and some are perceived as better than others. The better the area or neighborhood the more a potential home buyer will be willing to pay. Lastly, I would like to point out that a home on a busy street will not sell for as much as a home in a deep neighborhood on a cul-de-sac. Location is one of the single most important factors in pricing your home. When the banks appraise your home they want comparable properties that have sold as close to your location as possible, usually no more than a mile.
Condition of your home
Homes that are perceived to be taken care of and in impeccable condition will command a higher price. If your home is cluttered, not so clean and has some repairs to be done you cannot compete with the homes in the marketplace that is in spectacular condition. Many times some paint and a heavy duty cleaning can go a long way in preparing your home.
Size of your home
Price per square foot is a big consideration in pricing your home. When comparing homes you want homes to be no more than 25% smaller or larger than your home, preferably much less. A 2500 square foot home cannot be compared to a 1400 square foot home even though they may be located in the same neighborhood. The range of price per square foot for similar homes can really help you put the pricing of your home in perspective. Say you look at 10 homes with similar square footage and they range from$95 sqft to $231 a square foot and your trying to ask for $300 a square foot, you probably need to rething your pricing strateg
When thinking about square footage it is only above ground space you consider. Basement space is severely dicounted as well as sometimes 3rd floor finished attic space.
Function of your home
The function of your home may greatly impact the price that your home will most likely sell for in your local real estate marketplace. Major things to consider are the number of bedrooms, the number of baths, a master bath and so on….. Being in New England homes can be a wide range in age. A colonial in 1950 will function very different than a colonial built in the 1990’s. Rooms are closed up and not as open and home buyers want a much more open feel today. Though there is lots to consider when it comes to function here is a specific scenario.
A homeowner has 2800 sq feet of living area, about a third of it is a family room on the third floor that is accessed through the fourth bedroom. Your comparing your home to similar sized homes but they all have first floor family rooms with most of them having cathedral ceilings. At the end of the day, the first home will not compete from a function standpoint. Who really would prefer a third floor family room? Nobody!!
Appeal of your home
How your home is perceived by the general buying public will greatly impact the price home buyers are willing to pay. I’ve been in some odd homes. The square footage is there, the function is there, the location is there but there will be something that makes the house unappealing. It could be the design, it could be the style, it could be a bizarre layout or any number of things. Perfect example is you can have everything but you have high tension wires running through your back yard. This makes it a hard sell. Here in New England the broadest appeal home is a center entrance colonial. Pretty much no home buyer will balk at a center entrance colonial.
Lot size of your home
The acreage or lot size of your home has some value but not as much as homeowners think. Yes, an acre lot is more valuable than a 6,000 sq foot lot. But a 10,000 sqfoot lot really has no impact over a 6,000 sq foot lot. Basically when you are talking about acreage a building lot is a building lot. if only one house can go on it there are generally no huge value adjustments.
Also be realistic about the usable space of your lot. You can have a perfectly flat 7500 sq foot lot that can have more useable space than 10 acres of wetlands. The 7500 sq ft lot would probably be more desirable unless a home buyer was hell bent on privacy.
Personal Improvements of your home
Improvements to your home that are highly personal and to your taste hove little to no impact on the value. Ok now these examples are real, I have run into this:
- I have an archery range that I put in that cost over $8,000
- Hot tub sunken smack dab in the middle of a 20×20 foot family room
- Sound proofing the entire basement…. literally no sound could be heard in or outside of the basement
- 5 Coy ponds all over the yard
- Combo wood burning/ oil furnace
- Working toilet in the corner of a dirt and fieldstone basement with no sink or shower
- 3 sheds on one small lot
- 7500 square foot bob shelter from the 1950’s that cost over $1,000,000 to build in the 50’s
Yes folks, everyone of these home sellers tried to put a significant value on these items that in some case may have detracted value of the home.
When pricing your home consider these factors and be realistic in comparing your homes to the comparable homes on your list. Consult with a Realtor you trust. Having good market data as well as knowledge of what today’s home buyers want is key to a successful real estate transaction. Happy Home Selling!!