The Price Is Right

Although a REALTOR® will work with you to determine a listing price when you decide to put your home on the market, it helps to understand the process agents use to reach that figure. Although methods vary, there are a few common steps.

 First, REALTORS® complete a CMA (Comparative Market Analysis), which compares your home to similar homes in your area that recently sold, homes that are currently on the market, and homes that didn’t sell. Generally, an agent will formulate a base price from this data and factor in additional positives or negatives (for instance, if your home has a deck or a finished garage, the base price — your home’s initial value — would rise). 

 Next, the REALTOR® considers the market conditions. In a buyer’s market, your price might need to be a little lower than the base CMA price in order to reduce its time on the market and have a higher probability of selling. In a seller’s market, the listing price can be a little higher.

Another strategy is to consider how sales of comparable homes are faring — for instance, if the prices in your area are dropping X percent each month, consider settling on a lower asking price to boost your chances of selling quickly.

Be sure to ask your REALTOR® how he or she has arrived at the recommended listing price. A good agent will be able to walk you through the numbers and explain the strategy behind settling on a given listing price.