Pricing your property for the For Sale By Owner …..Home Owner.

You have decided to sell your home and made the decision to attempt it on your own, maybe to save on the commission, to offer it for a lower price than your neighbors who have it listed with a real estate agent or just because you feel you have the knowledge or experience it takes to sell it By Owner. Whatever the case, you have made the commitment to go for it and now need to determine a price.

One of the steps you must complete as a For Sale By Owner property owner is pricing your property effectively. What is it worth, and how do you determine its’ value?

Determine Pricing: What is the exact magic number that your home is worth and how do you determine it? Guess what, no one knows. That's right, no one knows….at least not yet…..!

What Real Estate Agents and Appraisers all know yet most don’t openly admit, is that “the Market determines the Market-Value of your home” What does this mean…..the Market determines the Market-Value of your home?

What it means is that your home is worth exactly what someone will pay for it, no more, no less. The fair market value is the price at which the property would transfer between a willing buyer and a willing seller. Market value assumes that the seller is under no undue pressure to sell and the buyer is under no undue pressure to buy. It also assumes that the property has been exposed for a reasonable time to a free and open market.

Not every home of similar style, size and age will sell for the exact same price in a neighborhood. Many factors effect Market-Value, some of them include: location, size, view, improvements and amenities just to name a few. For example assuming all other characteristics of a home are the same, a home with upgrades such as a new kitchen will most likely sell for a higher price than one with a 10 or 20 year kitchen. The same goes for location, again assuming all other characteristics are the same, a home that is on a street with minimal traffic should sell for a higher price than one that is on a busy street.

Where does this lead you in helping to determine Market Value and where do you start? You don’t want to price your home to high, thus eliminating that part of the market that knows what they are willing to pay for a similar home in your neighborhood. Over-pricing your home is the single largest factor that prevents For Sale By Owner home sellers from successfully selling their home. And you don’t want to price your home to low, or sell it for less than Market Value. You have several choices that can help you narrow in on Market Value:

1. Hire an appraiser.
2. Obtain the opinion of a real estate agent or broker in your area.
3. Get an automated valuation. (AVM).
4. Research, Research, Research.

Hire an appraiser.
What’s An Appraiser? An appraiser is a licensed professional who provides appraisal services for a fee. These professionals are often required to take courses and have undergone an extensive training period. In States where appraisers must be licensed, the appraisers must also pass a test, complete basic education requirements and adhere to continuing education guidelines. An appraisal is the professional opinion of an appraiser as to what a home is worth. An appraisal can provide you with an unbiased and impartial analysis as to the market value of your home.

Appraisers use a number of factors when performing an appraisal, such as the condition of your home, what comparable homes have sold for in your area, and other determining factors that impact the value of your home. The appraisal is then provided by means of a written report. When hiring an appraiser, keep in mind that you have hired a professional for his opinion. If you were to hire two different appraisers, from two different appraisal firms, you most likely will get two different opinions. You can find appraisers in your local yellow pages, or online.

One of the easiest ways (not necessarily the cheapest) to accurately price your home is to contact your local qualified home appraiser.

Obtain the opinion of a real estate agent or broker in your area.
A real estate agent or broker is a person who works in the real-estate business and may be a member of a National Association, a local Board of like professionals and may be a member of a local multiple listing service. A real estate agent is a professional often hired to help you buy or sell a home. Your real estate agent can also help you determine the market value of your home, and are generally very knowledgeable about Market Value. These are professionals whom make their livelihood “brokering” real estate. We do not promote that you have real estate agents or brokers recommend Market Value or do what is known to their industry as a CMA or Competitive Market Analysis if you do not plan on using their services. Some of them will gladly offer their expertise even knowing that you are marketing your property as For Sale By Owner. They do this in hopes of you using them if you chose list it with a broker at a later date or they may have a potential buyer and would like you to consider working with them and paying a commission if their buyer buys your property.

You will find that once you list your home as a For Sale By Owner that real estate professionals will be contacting you either with solicitations to list your home with them or with potential buyers. Often times these solicitations are accompanied with a Competitive Market Analysis of your home.

Get an automated valuation. (AVM).
An automated-value-what? Every day, more and more people are turning to automated valuation models for their home valuation needs. Can automated valuation models replace an all-out appraisal when buying a home? Maybe not yet, but they are definitely gaining in popularity.

So what are automated valuation models anyway? An AVM is a residential Valuation Report that can be obtained in seconds. It is a technology report, the product of an automated valuation technology analysis, public record data, and computer decisioning logic combined to provide a calculated estimate of a probable selling price of a residential property. There are many different producers of AVM technology, the orginial developers were instituational data warehouses like First American and Fidelity. They were originally built for larger institutions and Wall Street as a method for them to quickly and cost effectively analyze large groups of real estate mortgages. Over the years their accuracy has increased dramatically.

How do they work? Let’s say you’re selling your home and you want to know what it’s worth. Automated valuation models will take the data of your home, such as square footage, age, etc. and will combine that information with other information, such as how much comparable homes in the area have sold for, and will give you an estimated value of your home based on that data. All it takes is an address.

Why would you want to use automated valuation models over the services of a full-service appraiser? Full-service appraisers definitely know how to do their jobs, but they definitely do it at a cost that is substantially higher than an AVM. Not everyone can afford, or even wants to afford, the prices charged by full-service appraisers. Automated valuation models offer a cost-effective alternative to full-service appraisers, allowing homeowners to find out the true value of their homes with minimal cash out of pocket.

Research, Research, Research:
There are many aspects involved in going at it on your own. Your involvement and activity from potential buyers will vary based on, how you have priced the property, how active or inactive the real estate market is in your area, the location of the property and how you have marketed the property.

Lets look at each one of these individually.
It's easy. Despite what a real estate broker may say, selling a house is not rocket science. (I don't know one agent who is also a scientist). They know that, and soon you will too. Just follow the simple selling steps below. And, if you have any questions, call us and one of our representatives will try to answer any questions you may have.

Pricing your home effectively
One of the best ways to correctly price your house when selling is to find out how much other homes, similar to your own, recently sold for in your neighborhood. Talk to home sellers, buyers and check out the real estate listings in your local newspaper.
Typically, if you set the price of your home at 5 to 10 percent above the market price, you are likely to end up with an offer close to your home's true value. Also, you may try calculating the cost per square foot of your home compared to the house selling prices in your area (divide list price by square footage of livable space). If your house has more features or other desirable qualities, you may want to set a slightly higher house selling price.

Finally, when you are comforatable with the price you have determined, set the asking price just under a whole number, such as $169,900 rather than $170,000.

About the Author:

Greg Sullivan is the President of http://www.byownermls.com/, a For Sale By Owner MLS service, the leading real estate search engine of homes for sale by owner (FSBO). For more information, please visit http://www.byownermls.com/.