When it comes to sell your home, how to set the sale price is one of the most important decisions you have to make. It’s also one of the most complex.
With a constantly shifting market and substantial sums of money at play, setting a price for your home for sale can seem like quite an overwhelming task.
At the end of the day, pricing is often all about considering supply and demand.
Campbell Cooney, director and auctioneer at Hodges, says vendors often price their own homes based on what they need to repay debts or buy a new house.
“In real terms, that sort of price bears no relation to the home’s actual market value. Sadly, that’s just not how it works,” he says.
Vendors often also compare their home to nearby properties to come up with a price, but unavoidable personal bias can creep in.
“Of course when it’s your house, you’re going to think yours is better, more valuable. It’s difficult for vendors to be dispassionate.”
“Ascertaining an independent value is harder than it seems, though,” says Cooney.
“Most people get three real estate agents to come in, looking for three valuations on their home, but in reality, what they’re getting is three pitches for business,” he says.
A reputable agent, with experience in the local area, will work with a vendor to arrive at a reasonable price, understanding all the relevant market forces.
“The agent’s job is do their research and understand the local market, and also understand the vendors’ expectations, to reach a price that is reasonable, with a willing seller and willing buyer,” he says.
For just a few hundred dollars, vendors can also get a sworn valuation from a qualified valuer, Cooney says. “There was a saying years ago that if you want a valuation, get a valuer.”
“Vendors can get a basic valuation for a few hundred dollars – less than a building inspection – on then it’s all there on a couple of pages.”
What things you need to look at when setting the price
When setting the price of your home for sale, there are a combination of factors that you need to consider. So get comfy and be prepared to do a little research.
1. Look at listings in your area
It goes without saying that when selling your house, you need to do some research on what’s happening in your area to give you a good indication of the current market trends.
Start by checking out the real estate listings in the same area as you. Start by focussing on properties that have been listed over the last six months or so.
When checking out the listings, you will want to compare the original listing prices with the final sale prices. This will tell you what you need to know on any price reductions and supply and demand in the area.
2. Compare similar properties
There’s no point in doing comparisons with a one-bedroom home when you live in a five bedder. You should focus your research on looking a similar properties to you own – a good range is places that compare in square footage within a 10% variance up or down.
It’s not just square footage that you want to look for either. If possible, look for listings of homes that are of a similar age to your own house.
3. Consider expired and withdrawn listings too
To really get into the nitty gritty of what’s happening in the market, you’ll need to put on your detective hat and hunt around for expired and withdrawn listings too.
This will help you work out if any listing were taken off the market and resisted and show any variance in listing sale prices. This should provide further insight into what is happening and give your some more direction with what sale price is appropriate.
How to calculate the value of your home
Once you’ve done all of your detective work and have the information that will tell you what’s been going on in the market in your area for houses comparable to your own, it’s time to crunch the numbers.
If for instance, you’ve found three or four comparable sales in your area, you can work out an average and this will give you a clearer idea on what you will be about to realistically ask for the sale of your home.
At this stage it’s a great idea to sense check with experts – you might want to add or subtract 10% of this average to either be competitive in the market and therefore encourage a quick sale or try your luck and aim to get the most for your house sale as is possible.
This article was originally published on
10 Dec 2020 at 9:00am
but has been regularly updated to keep the information current.