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Selling Your Home Yourself - Pricing It Appropriately

When you're selling your own property, whether it's a house, townhouse, condo, apartment, a finished lot, raw land, a farm, a ranch, or whatever, the first thing to get right is the price you ask for it.  If you work with a broker, the legwork is done for you.  When you work as a FSBO (for sale by owner), you need to figure it out yourself.  Let's look at how to do just that.

First, don't make the mistake of looking only at what you need to get out of it.  It's important to know that, of course, but that number may, or may not, have any relationship whatsoever to market price.  It may be higher or lower than market price.  The first is great.  The latter may require you to rethink whether you want to sell your property at this time.

If you price your property below market price, it'll be snapped up quickly, but you'll leave a lot of money on the table.

If you price your property above market price, it may sit there unsold until the cows come home.  If it's priced very much above market price, people won't even come and look at it.  The marketplace talks.  Loudly.

So What's Your Goal?

Market price is nearly always a range of prices, high, medium, and low, not an exact price.  You want to price yourself near the top of the market price range for your property.  That way, you'll have flexibility to negotiate price if need be.

The exception to the above is if you're in a hurry to sell your property.  In that situation, you should price yourself near the lower end of the market price range, but still leave some room to negotiate.

How Do You Determine Market Price as a FSBO?

The first way is the simplest and most expensive.  Have it appraised by an appraiser who does appraisals for one or more mortgage lenders.  Call the firm who initially made your mortgage loan to you and ask who they use in your area.  Be sure the appraiser knows your purpose is to establish the asking price for a sale. 

This approach can cost a few hundred dollars, but it can be money well spent.  In addition to helping you price your property, it can also be helpful to show a buyer with whom you're negotiating that an appraisal supports the asking price.

If you live in an area with a tight pattern of sales prices, such as a subdivision with houses in a narrow range of sizes and styles, you can check the price of sales in your neighborhood over the last three to six months.  Many jurisdictions have this information online.  If not, it is a matter of public record and should be available at the courthouse.

The more individualized and unique your property, the more difficult the above approach is, but with a little work, you can learn a lot.

An alternative to that is to do an online search, such as "pricing + house + your state," for example, and check out the Internet sites which help you price your property.  Some of these use real estate agents/brokers as resources, and that leads us to another option.

It's really unfair if you're sure you will under no circumstances use a broker to help you sell your property, but if that's your fall back position (if selling on your own doesn't work out), you might invite a broker to do a market analysis of your property for you.  Be up front.  Explain that you're going to try it on your own first.

Even under those circumstances, many brokers are willing to help you evaluate the market price of your property without any charge to you.  They also usually give you a presentation of how they'd go about marketing your property should you decide to use them.  Listen to that carefully, too.

You can start evaluating whether you want to work with this person if you're not satisfied with your FSBO efforts, and you may very well pick up marketing ideas you can implement yourself. 

A Note of Caution

Don't rely too heavily on what neighbors tell you in social situations about the sale of their own and/or other properties in your neighborhood.  Listen, of course, but be aware that they often just know the original asking price and the fact that there's a buyer in the picture.  They don't know that because of the condition of the house, the asking price was lowered, a redecorating allowance was given, etc.

So don't say to yourself, "Well, that house sold for $X, my house is in much better condition; therefore, I should be able to get $X + $Y."  Maybe so.  Maybe not.  Base your pricing decisions on the most solid information available to you, not neighborhood gossip.

Base your pricing decisions on solid information, use good common sense, and your pricing decisions should lead to a good result.

Good luck with the sale of your home.

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