Most sellers envision making a tidy profit when they sell their home and often have some particular numbers in mind when they decide to sell. Unfortunately, some sellers are far too proud of their homes and the prices don't mesh well with the local real estate market. Setting a sales price is not a simple matter and should only be determined using several factors. Read on to find out more.
It's Not About Your Mortgage
Many sellers try to base their wishes on how much money they owe the lender, but that can backfire. There have been times in the past few years when buyers were able to buy homes with easy financing for inflated sales prices. This profited the lender but left homeowners with a gigantic mortgage not based on any of the below factors. When the home is not valued at the same level as the existing loan pay-off, things can get tricky. This situation is known as a short sale in real estate terms and means that potential buyers have to bring cash to the closing so that their mortgage loan is aligned with an appraisal. This situation presents more challenges but some buyers are willing to pay down the existing mortgage so they can have the home.
Understanding Home Comparables
Known as comps for short, this way of setting a price is based on the recent sales of comparable homes in the same general area. Once you consult with a real estate agent, they will tour the home, noting special features like recent updates, large lots, preferential locations, and more. Then, the agent runs the comps by accessing the multiple listing service (MLS) to survey recently completed sales of homes that are very similar to your own home. The sales should be within the last few months (or weeks), be in the same neighborhood or town, be like in size, and have the same features. This research provides the agent and the seller with what they can reasonably expect to be paid for their home.
Appraisal Issues and Funding
Most buyers will have to arrange for a mortgage, and part of that process is to hire a professional appraiser. Buyers need for the appraisal to be more (or right at) the purchase price of the home. If the appraisal comes in too low, the mortgage company won't provide the mortgage to the buyer. If the appraisal comes in too high, the seller may be losing money on the deal. That is why some sellers have their home appraised prior to placing it on the market rather than waiting for the buyer to do so. That information, along with the comps, provides sellers with enough information to price accordingly and appropriately for a fast and equitable sale.
If you want to sell your home as-is, talk to a real estate agent to find out more.