Buying and selling real estate for sale by owner

Setting the asking price

You’ve lived in your home for a number of years and now its time to sell. You think to yourself. How do I set a fair asking price?  We’ve added on, remodeled the kitchen and baths, and finished the basement into a family room. I’ve invested a lot of time and money into my home; plus, the house down the street sold for twice what I paid for my home 15 years ago. So then what’s a fair asking price if I sell my home today?

Consider what type of market your home is located in now, buyers market or sellers market? To do this consider some of the following.

Sellers Market: The ideal market to sell a home in is a sellers market. A sellers market is typically when there’re more buyers in a specific market area than homes available to buy. Buyers often compete with other buyers for homes often bidding higher than the asking price. A real hot sellers market could see multiple offers the same day the sign goes in the yard.

Buyers market: In a buyers market the reverse is true. There’re more homes than buyers and buyers often make offers well below asking price. Buyers are also willing to make offers on others homes before negotiating hoping to buy the best value in the market.

Housing inventory: To determine the type of market you’ll be selling in you’ll need to know the housing inventory. The inventory is all property available for housing in your area and includes homes listed with real estate brokers, builders, for sale by owners, through auctions and available by bank owned real estate (REO).

You can research inventory on the web. Sites like Realtor.com represents listed properties by real estate brokerage firms. You’ll also need to research for sale by owner sites as well as local newspaper or drive by yard signs to get the other homes in your market area. Some websites can give you a figure based on area selling trends, typically for a fee. Another place to get accurate information is a real estate company or appraiser. They will be looking for your business or a fee as well in most cases.

Next you’ll need to consider the amount of time each of those properties has been on the market or DOM (days on market). Real estate companies are a good source for this information. Zillow.com can also give you some idea weather prices are rising or falling. Try to compare the dom of current homes for sale today to homes that sold a few months ago. In general, if homes are selling faster than a few months ago you’re either in a sellers market or headed that way and can possibly receive a higher than asking selling price. If the reverse is true then a buyers market is what you’ll be dealing with and lower selling prices can be expected.

The last thing is new construction. If builders are building entry level housing and your home is more of a first time home buyers’ property then be prepared to sell for less than their asking price. On the other hand it may also indicate a demand for housing in that price range. Check with local government agencies to help determine your situation. If builder overbuilds they could offer big discounts to move their inventory as well.

Professionals in the business: It's up to you to seek out good advice. If you're uncomfortable with the answers you get ask for a second opinion. In the end regardless of whether you're selling on your own or through a brokerage firm it's always wise to get competent and reliable information. Ask questions if you don't understand. There are professionals that can help.