Choosing a price point is one of the toughest decisions you will make during the process of listing your house for sale. You will likely have plenty of advice from your agent, but at the end of the day, the final decision is all yours.
When choosing a number to represent the value of your home, you have to be careful not to let your obvious bias come into play. You might be able to list a dozen personal reasons that you feel your house is worth more than the others in your neighborhood, but anyone thinking about purchasing it is going to be using nearby homes that have recently sold to gauge what your home is worth.
With that in mind, let's take a closer look at five key factors that determine just how comparable your home might be to the other homes in your community.
Raw Square Footage
The easiest way to compare your property to other houses that have recently sold is to start with the total square footage. This number sums up all of the intricate details of how big a particular house is in just one simple number.
When potential buyers are browsing houses online, the total square footage of a house is almost always one of the first numbers they will see, so this is a key factor in determining how they view the property.
Bedrooms & Bathrooms
On many of the big real estate websites, the number of bedrooms and bathrooms is listed right up there with the total square footage, making those numbers another key factor that buyers use in determining what a house is worth to them.
The range of value assigned to an extra bedroom or bathroom will vary based on your community, but buyers are going to add or subtract value to your home compared to others in the area that have recently sold based on the number of rooms.
Location, Location, Location
Another key factor in determining the value of a house is where it is located compared to other homes that have recently sold.
Depending on where people want to be in your community, your house could pick up some value points based on being close to things like a downtown shopping area or a quiet lake. Homes typically get bonus points for corner lots and cul-de-sacs as well.
When we are talking about recent sales that people are using for comps, we are generally talking about sales within the last six months. However, sales within the last six weeks are almost always going to carry more weight than sales that happened further back in time.
It all depends on exactly how many comps are available in your community, but if there aren't many to work with, you may have to expand your time horizon past the six-month mark.
Big real estate websites often come up with their own price estimates like Zillow's "Zestimate" to help shoppers compare the value of a home to the asking price. Local real estate agents and quality appraisers aren't likely to be influenced by these numbers, but potential buyers will be, so it is something sellers should at least be aware of when making their pricing decisions.
The value of a home is always going to be best defined as the highest amount someone is willing to pay for it. But by using recent sales in the area as comps, we can typically come up with a pretty good estimate of what that number will be.
This is exactly what potential buyers are going to be doing when they evaluate your home, so spending a little time thinking about comps before choosing a listing price can be a big help to you in the long run.