The time has come for you to finally put your home on the market. There are a number of steps you will need to take to get your home ready, but the number one thing you should consider seriously is pricing your home to sell.
How will you decide the right price? I know you probably have a number in mind, but what did you base that number on? Is it based on any real data or just a number you feel your home is worth? When you hire an agent to sell your home they are going to do the work to come up with the right price at which to put your home on the market.
What is the right price? Your agent will do an in-depth analysis of comparable properties (comps) which have recently sold or are currently under contract in your direct neighborhood. These are what buyers and their agents are going to base their offer on and what appraisers will be looking at to determine how much they will end up approving the loan for. So how does this process work?
Your agent will compare like for like. The comps will be homes with a similar square footage, condition, number of beds and baths, lot size when applicable and whether upgrades have been done. If your home is in original condition and the comp has been fully upgrade or vice versa that will be taken into account. Also, the location on a street makes a difference. Maybe the comp is close to a freeway, on a busy corner, or close to a school, or maybe your home is. Does the comp have a view? Does yours? These are among the facts that are taken into consideration. If no nearby comps can be found then your agent will start looking further afield and maybe in a another similar neighborhood.
Another method used to get to the right price is the absorption rate. What is absorption rate? It is a method used to determine how long it will take to sell a home in the current market. If 18 homes have sold in the past six months that means that an average of three homes sell every month. If there are 30 homes currently listed then it will probably take 10 months to sell the current inventory. One to five months of inventory is considered a seller’s market, five to seven months a balanced market, and anything over seven months a buyer’s market.
Selling in a seller’s market provides a little more flexibility because of the lack of inventory and the fact that buyers are competing for properties. However, even in this market buyers generally are still not willing to overpay. They will still be looking at the comps. And just a note here, homes currently on the market are not valid comps for pricing your home since we do not know what they will end up selling for. They are good to look at so that you don’t end up being the most expensive home on the market.
Bottom line, pricing your Los Angeles home to sell is an art. If you price it too high you are almost certainly guaranteed to net less than you will if you had priced it correctly from the beginning. You cannot argue with the facts.
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