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First of all, let’s review the selling process itself. It normally goes like this:
Choose an agent
home for sale 300x199 6 Factors That Determine If a Home Will Sell
Choose a time frame
Choose the list price
Marketing efforts begin
Negotiate a sale
Accept a contract
Open the transaction
Complete the inspections
Clear any contingencies
Ensure loan approval
Close the transaction
Coordinate the move
Now, let’s focus on what happens during steps 3 through 5, from pricing your home to putting it on the market. The following are the 6 critical factors that determine if a home will sell; they’ll also help you land on the right listing price.
1. Terms/Financing
First of all, the monthly cost of homeownership is an important determining factor in a buyer’s decision making process, so keep this in mind when pricing your home. An affordable monthly payment encourages buyers to write an offer on your home and to pay fair market value for the property.
Make sure a financial worksheet is placed in your home for potential buyers. This worksheet should provide the monthly cost of various down payment/loan option combinations. Here is an example of such a worksheet:
Home Buyer Financial Worksheet 300x170 6 Factors That Determine If a Home Will Sell
2. Home’s Condition
If a home has emotional appeal, it sells with the fewest possible inconveniences and for the highest net to the seller. So, try to make your home as “emotional” as possible.
First, take note of repairs and/or improvements that you think should be done to maximize your home’s appeal.
After such changes have been made, walk through the home and de-clutter.
This includes removing small appliances from the kitchen counter, picture frames from end tables, bathroom toiletries from the sink, etc. You want to ensure that potential buyers can imagine their things in the space while making sure your home doesn’t feel too sterile.
3. Home’s Location
This is a factor over which you have no control, but it is a critical consideration when pricing your home. Remember, the most desirable locations create higher demand and, therefore, sell for higher prices. Homes in locations that are less desirable sell for less.
To price your home correctly, you must know the advantages and limitations of its location. Draw from your own experiences living in the area, and make a list of these advantages and limitations. Don’t get offended if your realtor has some forthright remarks about your neighborhood—after all, you’re moving out.
4. Market Conditions
The real estate market moves through cycles. These cycles are caused by supply and demand issues. However, no matter the current market, it’s important you choose an agent that knows how to attract the greatest number of buyers, because more buyers equal a higher net profit.
Your realtor should also provide you with a Comparative Market Analysis (CMA). This will tell you how much similar homes in the area have recently sold for, giving you a better idea of what your listing price should be.
5. Agent Marketing
The right realtor should have an advertising campaign in place and ready to go once you sign a contract with him/her. Furthermore, s/he should have access to the multiple listing service (MLS), internet visibility (social media sites, website, etc), and a direct marketing strategy.
Furthermore, your ideal realtor should be comfortable hosting open houses, have unique sources of potential buyers, community recognition, and great overall communication skills. The more effective your agent’s marketing strategy, the more buyers will be attracted to your home and the higher net profit you’ll get!
6.
Pricing
It’s important to keep in mind that homes priced correctly sell for the highest net and with the fewest inconveniences.
To determine your property’s value, take the following items into consideration:
- Competing properties
- Available financing
- Your home’s condition and appeal
- General economic conditions
- What buyers have been willing to pay for similar properties (CMA)
- Supply and demand factors
- Location
The following are factors that do not determine property value:
- What you want/need from the home
- An appraisal done by a bank or tax assessor
- What you heard was the selling price of your neighbor’s home
- The value of your home’s insurance
- What you’ve spent on the home
- The cost of the next home you want to buy
If realtors aren’t previewing your home, or if they preview but don’t show it, this is a warning sign that the home is not priced correctly or does not show well. Similarly, if buyers are being shown your home but nothing comes of it, they are finding better properties to purchase. In other words, your home is being eliminated from consideration because it is not competitive in the marketplace.
On the other hand, if you price your home competitively from the start, you will most likely receive a greater net profit. Take note: the longer a home is on the market, the greater the difference between the asking and the selling price.
Overall hazards of overpricing include:
- Lower agent and buyer response
- Minimized profit
- Increased risk of appraisal problems
- Longer time on market
- Reduced net profits
- Frustration, false hope and inconveniences
Therefore, make sure you consult with your agent and take into account all factors before pricing your home. If your home is priced correctly and you’ve paid attention to the 6 critical factors, you’ll be on your way to closing a deal in no time!
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