How to: Set a price for your home

Setting a price is one of the most important decisions vendors have to make when selling their home. It’s also one of the most complex.

With a constantly shifting market and substantial sums of money at play, setting a price can tricky.

Vendors have two basic choices; work with a reputable real estate agent to set a price or pay an independent valuer.

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Often vendors price their own homes based on what they need to repay debts or buy a new house.

In real terms, that sort of price bears no relation to the home’s actual market value. Sadly, that’s just not how it works.

Vendors often also compare their home to nearby properties to come up with a price, but unavoidable personal bias can creep in. Of course when it’s your house, you’re going to think yours is better, more valuable. It’s difficult for vendors to be dispassionate.

Ascertaining an independent value is harder than it seems, though..

Most people get three real estate agents to come in, looking for three valuations on their home, but in reality, what they’re getting is three pitches for business.

It is important to be wary of inflated valuations, as they may not accurately reflect the market.

The agent with the highest valuation is not necessarily the best choose.

A reputable agent, with experience in the local area, will work with a vendor to arrive at a reasonable price, understanding all the relevant market forces. By looking at other properties in the area that have sold and comparing them to yours should give a good indication on where the value should be. Of course a good agent will recommend an asking price based on these comparable sales, and any other properties currently on the market that you will be in competition with.

The price is just as much of a marketing tool as the photos or the signboard, it is essential to getting buyers to attend the property. If you price a property too high the right buyers with a suitable budget won’t come and look at it, and the buyers that do with a higher budget will see more value in other properties of the same price range. If the price is too low then you will get numerous buyers inspecting the property, and lots of low offers from buyers with a low budget. Buyers with the right budget could even think there is something wrong with it by comparison to others they have seen,

The agent’s job is do their research and understand the local market, and also understand the vendors’ expectations, to reach a price that is reasonable, with a willing seller and willing buyer.

For just a few hundred dollars, vendors can also get a sworn valuation from a qualified valuer.

Vendors can get a basic valuation for a few hundred dollars – less than a building inspection – on then it’s all there on a couple of pages.

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