How to Set Your Sale Price | Real Estate

If you’re thinking about putting your home on the market you’re obviously going to have to set the sale price that will achieve the result you want from the sale.  The idea of defining a result has merit, in that if you need a quick sale you will probably set a lower price than if you are merely testing the market to see what your home is worth.  

The first consideration in setting an appropriate sale price is an understanding of the nature of the real estate market in your location at the time you put your property up for sale.  There are both “buyers” markets – where there are more homes available for sale than there are buyers looking for homes – and “sellers” markets – where there are more buyers out looking for homes than there are homes available for sale.

In a buyers market you will generally set a lower sale price than in a sellers market.  When the supply of homes for sale exceeds the demand, buyers have the advantage since competition amongst the available supply of homes lowers prices.  The opposite is true in a sellers market, where buyers are more likely to accept higher priced homes since the supply of homes for sale is low.  Right now, most of Australia is still in a sellers market.

To determine the optimum price for your home you will need to know what similar homes in your location are selling for.  The easiest way to do this is to work with a professional real estate agent, who will run a CMA (Comparative Market Analysis) that will show you how much people in your area are getting for their homes which are similar to yours.  

Even with a professionally prepared CMA, setting the right sale price can be difficult.  No two homes are exactly identical.  If yours is a 4 bedroom home with 2.5 bathrooms and a newly remodeled kitchen, the CMA will show other homes with similar features.  The features, however, are never identical.  The kitchen in your home might be more attractively decorated than the kitchen in the comparable home.  One of your baths may have a whirlpool spa bath.  In short, do not expect a direct “apples to apples” comparison from a CMA.

Setting your sale price involves a certain amount of subjective judgment and excellent real estate professionals generally have such judgment.  They will work with you to get you the result you want.  If you have no need for a quick sale they will generally agree to list your home a little higher than they otherwise might.  Good agents provide you with a high and a low price and ultimately the decision is yours.  

The best agents, however, will tell you if the price you want to hold out for is totally unrealistic.  It is generally not good for the seller if the home remains on the market for an extended period of time; especially in a sellers market.  Potential buyers begin to wonder why the home has not yet sold; frequently leading to the mistaken notion that there is something wrong with the house.  

If you’re selling the house on your own it is possible to get comparative sales information from some Internet sites but it will be much easier with a professional agent.  However, be aware that there are unscrupulous agents out there who advise people to list their homes for low prices to ensure a quick sale.  Real estate agents only make their commission when the house is actually sold.  Unless you have an agent you can trust completely, you need to get a CMA and a recommended range of selling prices from several agents before you decide on the one with whom you would like to work.