Questions to Ask Before Pricing

Ask Your Agent

1.Are there improvements I can make to my home — both major and minor — that could enhance the price? Usually agents can do a quick review of your home and suggest minor improvements (e.g., painting, minor repairs) that will enhance your home’s value, but they can also suggest more serious improvements such as adding a deck that can recoup your costs — especially if most homes in your neighborhood have a deck.

2. How many homes do you list each year on average? A valid question, since it shows how much experience and activity this agent has had in helping set the sale price for homes they listed.

3. What do you think my home is worth? Even before an agent "runs the numbers” or walks into your home, he or she will have a pretty good price range in mind, if they know your address. And, that’s assuming the agent works out of your neighborhood.

4. How will you arrive at a price for my home? The right answer is pulling comps, coming to your home for a visit, market conditions, and reviewing data that shows the inventory of unsold homes in your neighborhood, days on market, and sale price vs. list price.

5. Will you do a comparative market analysis for my home? The right answer is yes. A CMA is not the end-all, be-all, but it’s one building block in determining value.

6. How long will it take to sell my house? This is not a yes or no answer. Rather, the response should be, "I will price your home fairly, but with your timeframe in mind.”

7. Is it a buyer’s market or a seller’s market? If there are lots of homes for sale in your neighborhood and they’ve been sitting for a while, this might not be the right time to sell since you might not get the price you’d like. If, however, the amount of buyers exceeds the amount of homes for sale in your neighborhood, you could command a higher price for your home. Your agent will have all of this information.

8. How many homes have you priced that sold above or below the original list price? Kind of like a batter who hits 4-for-5 during a game, this shows how skilled this agent is in hitting his or her mark in setting a good price.

9. What are the list prices of other homes in my neighborhood? It’s always good to know whether your home is alone in a price range or whether it’s competing with other properties since buyers tend to look at ranges of prices.

10. If the home doesn’t sell in 30 days, what kind of price reduction would you recommend? A savvy real estate agent will have a host of ideas, in addition to potentially reducing the price. Some agents might suggest offering a percentage back to the buyer to help pay closing costs, instead of lowering the price. In real estate parlance, this is called "seller contribution,” in which the seller gives 2, 3, or 4 percent back to the buyer for closing costs. But remember that the list price is the "biggest billboard" for a listing, and you always want the price to be as attractive and competitive (i.e., low) as possible. Sometimes reducing the home’s price by 5 or 10% will get you a sale.

11. The market: What can you tell me about current market conditions? What is the current average Days on Market in this neighborhood? How many houses in my neighborhood are on the market now?

Ask Yourself

1. How much is my home worth? If you’ve been hitting open houses and keeping an eye on home values in your neighborhood, chances are you probably have a pretty fair idea and could land within a range of $20K of what you’ll eventually ask for your home.

2. How do I find out the value of my home? You can use iCastle.com of your home, but that’s only a starting point. We have an entire section devoted to how to price your home, to help you. But in a nutshell, it’s a combination of online tools, doing your homework, the help of experienced real estate professionals and possibly an appraiser.

3. When I sell, what will I clear? Call your lender or check your monthly statement to find out how much you owe on your current mortgage. Also, if you have a home equity loan, find out the debt. If you’re using a real estate agent to sell your home, figure in a 6 percent commission rate – to be conservative. Figure in any taxes that you owe as well. Add these together and subtract from your home’s estimated value to get a good ballpark figure.

4. Will I have enough for a down payment on my next home? Obviously, this would only apply to people who are selling one home and buying another . But, you will need to figure out your proceeds (Step 3) and figure out how much you want to put down on your new home.

5. Do I have the knowledge to price my home? Right now, maybe not. But, like learning the prices of cars, TV sets and just about anything else you’ve purchased, you’ve become a knowledgeable consumer by reading, researching and asking questions.

6. Am I in a hurry to sell my home? If so, what kind of strategies should I use? If you’re in a hurry, you won’t have the benefit of assessing the market and its moods. But, if your have time, review the section Assessing the landscape [Link to "Assessing the landscape” section] to learn how to use time to your advantage.

7. Should I get a CMA from a real estate agent? Yes. A CMA – Comparative Market Analysis – is a slam-dunk for a real estate agent since the information is literally at their fingertips through a couple clicks on a computer. Interview several agents and tell them you’re thinking of selling your home and would like to know its market value. They won’t mind helping you since they will want your business, hoping your do-it-yourself appetite eventually goes south.

8. Should I get a professional appraisal? If you do your own research and solicit the help of real estate agents and you’re still not absolutely sure, then hire a professional appraiser. However, they will charge you about $200-$400 for their services.

9. What are the risks if I price it incorrectly? There’s no doubt that it could happen and the result of an overpriced home is that it could sit and lose value; the risk for under pricing is you’re leaving money on the table.

10. What about capital gains and taxes? Since the Taxpayer Relief Act of 1997 (oh, what a relief it was!), there are two basic rules:

a.) If you’re a single person and you sold a home for a gain up to $250,000, you don’t have to pay taxes on it. The money is yours free and clear. However, if you cleared $270,000 on your home, you would have to pay taxes on the difference, which would be $20,000. Or, for certain married couples filing a joint tax return, this figure goes up to $500,000.
b.) The home you sold must have been your principal residence that you lived in for at least two years out of five years prior to the sale.