Starting with the bare basics, home buyers choose homes based on:
PriceÂ â€“ their lenders tell them what they can afford
Location â€“ they know where they want to live and why
Condition â€“ they want homes that are well-maintained and move-in ready
They look at the available inventory â€“ your home and its competition.Â The greater the inventory, the more room they have to negotiate terms.
They narrow their choices to a short list, based on what they perceive to be the best value.
They buy according to whatâ€™s most important to them â€“ price, neighborhood, and/or condition. For example, a buyer who wants a certain neighborhood may choose a home in less than perfect condition, but only if the price is right.
What you should consider before you price your home
When home sales volumes increase, prices go up, and inventories of homes for sale fall below about six months on hand, (meaning it would take six months or less to sell all the homes for sale on the market to zero on hand) the market is said to be a â€œsellerâ€™s market,â€ because the marketâ€™s conditions favor sellers.Â
When sales volumes decrease, prices decline, and inventories of homes rise above about six months on hand, conditions favor the buyer, making it a â€œbuyerâ€™s market.â€
To sell your home in the current market, you have to consider the marketâ€™s conditions.
You may adjust your price and terms accordingly.
Your competition is not only other similar homes in your area, but what buyers can get if they buy brand-new.Â Your buyer is comparing size, number of bedrooms and baths, amenities, updates, views, landscaping, and dÃ©cor. You canâ€™t put a price on many features, but some qualities, such as fine workmanship, room flow, and convenient storage are simply worth more money to buyers.Â
If youâ€™re relocating or have another reason to be in a hurry, you donâ€™t have time to test the market. You have to price your home to get immediate and serious offers to buy.
Whatâ€™s not relevant to home buyers
If youâ€™re sentimental about your home, remember your buyer hasnâ€™t formed the same attachments. Your buyer may appreciate your home, but will still compare it to other available homes in terms of price, location, and condition before weighing emotion.Â
What you paid for the house
Many area home prices have receded as much as five to ten years. Sellers who paid high prices for their homes, purchased too recently to build equity, or took out second liens or equity loans may find that what they paid is not what the home is worth in todayâ€™s market. Buyers are only concerned with what they can afford.
What you paid for improvements beyond ordinary maintenance
Your swimming pool may be beautiful and add some value to your home, but some buyers may not want the upkeep or the insurance liability, so theyâ€™ll tend to offer less for the home than a buyer who really wants a pool.
What buyers expect is for homes to be properly maintained. Even if a home is in the most desirable of neighborhoods, it will never sell for as much as similar homes if it is in poor condition or lacking updates comparable to newer homes in the area.