Setting Your Home's List Price

Setting the list price for your home involves evaluating various market conditions and financial factors. During this phase of the home selling process, your REALTOR® will help you set your list price based on:

pricing considerations
comparable sales
market conditions
offering incentives
estimated net proceeds

Finding the Balance Between Too High and Too Low

When setting a list price for your home, you should be aware of a buyer's frame of mind. Consider the following pricing factors:

If you set the price too high, your home won't be picked for viewing, even though it may be much nicer than other homes in your market. You may have said to your realtor, "Bring me any offer. Frankly, I'd take less." But compared to other houses for sale, your home looks too expensive to be considered.
If you price too low, you'll short-change yourself. Your house will sell quickly, but you may make less on the sale than if you had set a higher price and waited for a willing buyer.

TIP: Never say "asking" price, which implies you don't expect to get it.

Price Against Comparable Sales in Your Neighborhood

No matter how attractive and polished your house may be, buyers will be comparing its price with everything else on the market. Your best guide to pricing is a record of what buyers have paid over the past few months for property in your neighborhood. Your REALTOR® should furnish you with data on comparable sales, and analyze it to help you come up with a suggested list price for your home. The decision about how much to ask, though, is always yours.

A Competitive Market Analysis (CMA) is the list of comparable sales a REALTOR® brings to you, along with data about other houses in your neighborhood currenlty on the market. CMAs are used to help estimate a possible list price for your home, and the analysis will also include data on nearby houses that failed to sell in the past few months, along with their list prices.

A CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. Also, an appraisal is done for a fee while the CMA is provided by your REALTOR® and may include properties currently listed and those currently pending sale. For the average home sale, a CMA probably gives enough information to help you set a proper price.

A Formal Written Appraisal (which may cost a few hundred dollars) can be useful if you have luxury or a unique property, if there hasn't been much activity in your area recently, if co-owners disagree about pricing, or if there's another circumstance that makes it difficult to put a value on your home.

TIP: If you order a market value appraisal, make it clear that you don't need an elaborate, or full narrative report, i.e., the kind that's complete with photos of the house and neighborhood. Floor plans and a site map is sufficient in most cases.

Is it a Buyer's Market or a Seller's Market?

A CMA often includes a Days on the Market (DOM) value for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run many months. Your REALTOR® can tell you whether your area is currently in a buyer's market or a seller's market. In a seller's market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer's market, if you really need to sell promptly, start by offering an attractive bargain price.

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