Pricing your property right can be a tough mountain to climb. So many things can go wrong; more so, in the absence of expert guidance. If you set the price well below market standards, you’re heading for a loss in what will potentially the biggest deal of your life. 

And, if you price it too high, you could be chasing prospective homebuyers away. What’s a savvy seller to do?

It takes an in-depth understanding of all the variables involved. Below, we’ve highlighted the three most important variables you should consider to hit the sweet spot when it comes to pricing your property.

Conditions of the local real estate market

If you understand where the current real estate market is headed, you can price your home competitively. In an extreme market, however, a lot can happen in a short span of time. Make sure you’re always on top of changes and be ready to adjust your property’s price accordingly. 

For example, observe if other homes similar to yours in size and features have been sitting on the market for far too long. If so, it’s an indication that you may want to lower your asking price in order to attract homebuyers. 

This likely indicates a buyer’s market. In this case, you’ll likely need to come up with strategies such as introducing home upgrades to get the offers coming in. That said, choose your home improvements carefully so that you can recoup the cost upon sale. 

And if the demand is high in your local estate market (a seller’s market), you can set a higher asking price for your home. 

Neighborhood comparables or ‘comps’

 To set a justifiable price for your property, you need to analyze the neighborhood comparables or ‘comps.’ These are properties with no more than 10% less or greater size than your home’s square footage. They should be of similar condition and age, and sold within the last three months. 

Review the asking prices and the actual sales prices of these comparables to get a fair estimate of what your home is worth. 

But what about the location?

• In densely populated urban areas, examine the comps within a half-mile radius.
• In rural areas, you may continue to look for comparables in nearby areas that extend out to several miles.

Pay attention to other key physical elements, such as proximity to nearby railways or major roads. This is a technique used by home appraisers and real estate agents to figure out the market value of your home, as having access to transportation networks is often considered an advantage for commuters and regular travelers.

Additional closing costs

When pricing your home, you need to consider closing costs. These include items such as title insurance, loan origination fees, and inspections. The state of your local real estate market again comes into play here. 

More often than not, sellers are responsible for paying the closing costs. However, in competitive markets, buyers and sellers tend to split the closing costs. In fact, buyers may choose to pay for it themselves if there aren’t many houses similar to yours in the area.

By implementing all three of these most important criteria of property pricing, you could close at or above the asking price. And isn’t an extra several (or more) thousand dollars worth the effort?