In this market, it becomes a challenge to try to get the pricing of a home right from the beginning!  There are lots of things that need to be considered when looking at how to determine a good price for a home!  So this post is my Top 10 list of things that a seller needs to consider when they sit down with their Realtor to come up with a price!  Of course, sellers are most likely aware of some of the advice that many Realtors (including myself) will give to the sellers they are talking to – that fair market value is what buyer and seller are willing to pay, that it really doesn’t matter to the buyer what you (the seller) want to get out of the house, that it really doesn’t matter what you (the seller) paid for the home, that it doesn’t really matter what you (the seller) have put into the home since you purchased it!  So if all of these things don’t matter to the buyer, then the next question that many of the sellers will ask is:  well, what should I take into consideration when trying to price my home?  So here are my thoughts:

• First, what is happening in the overall economy that is impacting my potential buyers thoughts?  All sellers need to consider these things.  For instance, foreclosures may not be bad in Richmond, VA, but if they are bad throughout the country as a whole, then the potential buyers are hearing how bad the housing market is and are applying what they hear to the Richmond local real estate market.  This comes into play when the buyers are deciding on a price and terms they want to offer to you! 

• Second, what is happening in the local economy?  In Richmond there have been several large layoffs and company closings.  Even if a potential buyer was not directly impacted by this, there will be the fear of what the future will hold and will they be in a similar situation at some point in the future.  Many buyers may try to get a pretty low price on a home simply in anticipation of what may happen in the future!

• Third, what is happening with interest rates?  Even if prices continue to fall, if the interest rates begin to rise, buyers may not have as much buying power as they could today!  For instance, if your home is worth $200,000 and interest rates are at 5%, the buyer’s P&I would be $1074/month.  However, if the value of your home declines by 10% next year to $190,000 but interest rates now rise to 6%, then the buyer’s payment is now $1139/month, a difference of $65/month.  This may be enough of a payment difference to eliminate some buyers from the market next year, especially if wages do not see any sort of increase! 

• Fourth, what is happening with foreclosures & short sales in the area?  Even if your neighbors or your area do not have high # of foreclosures or short sales, many of these listings are competing for your potential buyer! 

• Fifth, what are the other areas your potential buyers are looking at when considering your home?  In Richmond, as in most other cities, many buyers are considering several areas.  What is going on in those other areas, especially when it comes to pricing, will have a definite impact on your home’s price!

• Sixth, what is the condition of your home compared to others in the area?  This is where staging your home is most important!  Whether you choose to have a professional stager come in and do it for you, or you just critically look at your home and make the changes, you need to make sure that your home is now head and shoulders above the others, especially if there are lots of other homes on the market for sale.  Why not go and visit your competition and see just how those homes show so you know how to compete!

• Seventh, what repairs does your home need?  With all the inventory on the market, anything you can do to put your home in a stronger position than the competition is always in your best interest!  Sometimes it is worth paying to have a pre-listing inspection done, the repairs completed & the inspection available for your potential buyers to look at! 

• Eighth, how many homes in your immediate market area will your potential buyer have to choose from?  Many of the buyers that I work with here in the Richmond VA area want to make sure that they have looked at everything before committing to a particular home!  If there are 200 active listings in your area that a buyer can choose from, then you really need to make sure that yours is the best deal on the market – through pricing, staging and making sure that there are no major repairs needed!

• Ninth, how many homes in the surrounding, but comparable areas, will your potential buyer have to choose from?  Again, buyers will look in many different areas for their home!  Again, you need to make sure that yours is the best deal on the market!

• Finally, have you mentally divorced yourself from your “home” and mentally begun to think of it as a “house”?  When you think of your home as a “home” you have memories of you and your family and things that have made it a home for you!  But when you think of it as a “house”, then you don’t think about the memories – you begin to think of it as a product that you are selling to move to the next “home”!  This allows you to look at the house in a different light and to help you through the sale! 

So when you are sitting down with your Realtor, make sure that you are aware of these things, all of which can impact the pricing you set for your home!  As always, I welcome your comments and your questions!  This market will not always be like it is today, but if you are thinking of putting your home on the market in today’s real estate market, it is very important to realistically price it to sell – for many sellers it is a pain to continue to keep a home in show condition if it is not selling, and these considerations will help you not to have to chase a down market!!!  Enjoy the day!