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“What do you think the sale price of my home will be?”
This is an extremely common question asked by home sellers. Since there are never two homes that are identical, there is not a concrete answer to this question. There are lots of factors that can influence the sale price of a home.
One of the most important things to understand when selling a home is that determining exactly what the sale price will be is nearly impossible. Knowing what factors influence the sale price of a home can go a long way in estimating what the final sale price will be.
Below are many of the common factors that influence what the sale price of a home will be.
Local Real Estate Market Conditions
One of the biggest factors that can impact the sale price of a home is what the current market conditions are in the local market. When selling a home it’s important to understand what the different “types” of real estate market conditions are. There are traditionally three different real estate markets.
The first real estate market “type” is a sellers market. This is the most ideal market for a homeowner who is looking to maximize the sale price of their home. A sellers market occurs when there are lots of ready, willing, and able potential home buyers in the market and there are not enough homes for all of them. Buying a home in a sellers market can be very tricky since the supply is significantly less than the demand.
The second real estate market “type” is a buyers market. This is the least ideal market for a homeowner and will have the biggest negative impact on a homes sale price. A buyers market occurs when there are lots of homes for sale but not many ready, willing, and able potential home buyers in the market to purchase a home. A buyers market can often lead to homes sitting on the market and eventually not selling.
The third real estate market “type” is a balanced market. A balanced real estate market is not the most ideal for a homeowner, however, a homeowner can still expect a positive impact on the sale price of their home in a balanced real estate market. A balanced real estate market occurs when there is an even supply of homes for sale and the number of ready, willing, and able potential buyers looking to purchase a home.
Obviously selling a home in a real estate market that is experiencing a sellers market is the best scenario for a homeowner. Selling a home in a sellers market can have a huge impact on the sale price due to the fact many sellers will receive multiple offers on their home, which can lead to a bidding war.
Expertise & Experience Of The Real Estate Professional
In any given community, there can be hundreds or even thousands of real estate professionals who are able to sell a home. Being able to sell a home is not the same as knowing how to sell a home. The reality is that the expertise and experience of a real estate professional can have a huge impact on the sale price of a home.
Since all real estate agents are NOT created equally, making a mistake when hiring a real estate agent to sell a home can be a huge detriment to a homes sale price. If you’re selling a home, a few things you should expect from your real estate agent include;
Hiring a top producing real estate agent will impact the sale price of your home, in a positive way. Hiring a “post and pray” real estate agent will also impact the sale price of your home, in a negative way. A top producing real estate agent will do more than placing a sign in front of a home, entering the home in the multiple listing service, and pray that it sells.
Recent Sale Prices Of “Comparable” Homes
One of the most common real estate pricing strategies that is used by real estate professionals is a comparable market analysis, frequently referred to as a CMA. The purpose of a CMA in real estate is to evaluate the recent sales of “comparable” homes to a subject property. A top producing real estate professional will use a CMA to help estimate what the sale price of a home will be.
Since a CMA uses the recent sale prices of comparable homes, normally in the last 12 months, this can impact the sale price of a home. If a real estate market has experienced a significant drop in home values over the past 18 months, the probable sale price will be impacted negatively.
Not only will a real estate professional use a CMA to help estimate the sale price of a home but also to help reduce the chance there are issues with a bank appraisal. This is due to the fact that a bank appraiser will generally look for at least 3 recent sales in the last 12 months of comparable homes to determine a homes appraised value. If an appraiser cannot substantiate the agreed upon sale price of a home between a buyer and a seller, the bank will not agree to lend that amount of money, which can create issues.
An experienced real estate agent in many cases will have a better “pulse” on the local market than an appraiser will. This can helpful if there is an issue with a home under appraising and the appraisal needing to be contested.
Location & Neighborhood
If you’ve read a handful of real estate articles about pricing and sale prices, you’ve heard the saying, “Location, Location, Location!” The location and the neighborhood in which a home is located is a huge factor that impacts the sale price. Location and neighborhood are similar but not identical.
The location of a home is it’s actual physical location on a map. A home that is located on a busy road generally will have a lower sale price than a home that is on a quiet neighborhood street. The same can be said for a home that is located in a cul-de-sac versus a home located on a quiet neighborhood street. Other location based impacts on a homes sale price include;
The neighborhood in which a home is located can have a huge impact on the sale price of a home. There are certain things potential home buyers will look for in a neighborhood while deciding which one to live in. The most popular neighborhood based impacts on a homes sale price include;
Upgrades, Features, & Amenities
There are certain upgrades, amenities, and features that home buyers are looking for in a home. The quality of a homes upgrades, features, and amenities will also have an impact on the sale price of a home.
The primary reason a home with high end upgrades, features, and amenities has a higher sale price is due to the desirability from a buyers prospective. A home that is similar in configuration, square footage, and location with granite counters and upgraded mechanics will generally have a higher sale price than a home without these upgrades and features. A home with lots of upgrades and features will also sell faster then it’s competition.
It’s important that if you’re going to be completing a home improvement project you are aware of the impact on the sale price of your home. There are certain home improvement projects to avoid as they can have a negative impact on the resale value of a home. Some examples of the home improvement projects to avoid due to the cost of the improvement in comparison to the increase in the sale price include;
If you happen to be selling a luxury home, there are certain things that some buyers will expect. If your luxury home is lacking certain amenities, you need to understand that this can have a significant impact on the sale price of your home.
One of the most overlooked influences on the sale price of a home is the homeowner themselves. The motivation level that a homeowner has can greatly impact the sale price. One of the most lame excuses for overpricing a home is that the seller is in no hurry to sell their home.
A homeowner who has time and is not motivated to sell their home will often overprice their home. Overpricing a home can create damaging effects and impacts the final sale price of a home. A home that sits on the market because the seller is not motivated, in many cases, will end up having a sale price much lower than if they were to price it correctly from the beginning.
If you’re selling a home and have the feeling that you’re not in a hurry to sell, don’t list your home for sale. It’s better that you wait until your mindset is that you want to get your home sold, for whatever reason.
The final sale price of their home, for obvious reasons, is very important to homeowners. The final sale price can impact the home a seller maybe looking to purchase, the sellers retirement, and other things.
A seller who understands what the most common factors are that influence a sale price will position themselves in a better position. They will have an understanding what buyers will pay more for as well as how a real estate agent estimates a homes sale price.
Other Top Home Selling Articles
Are you wondering what it takes to sell a home in Rochester, NY? Maybe you’re wondering what factors influence the sale prices of Rochester, NY homes? The above factors all apply to Rochester, NY homes but there are others, depending on your Rochester, NY neighborhood. If you don’t have a top Rochester, NY real estate agent yet, contact me, and I’d love to discuss your homes individual situation!
About the authors: The above article “What Factors Influence The Sale Price Of A Home” was provided by the Keith Hiscock Sold Team (Keith & Kyle Hiscock). With over 30 years combined experience, if you’re thinking of selling or buying, we’d love to share our knowledge and expertise.
We service the following Greater Rochester NY areas: Irondequoit, Webster, Penfield, Pittsford, Fairport, Brighton, Greece, Gates, Hilton, Brockport, Mendon, Henrietta, Perinton, Churchville, Scottsville, East Rochester, Rush, Honeoye Falls, Chili, and Victor NY.
Visit our website at www.HiscockHomes.com.
© 2015 – 2016, Kyle Hiscock. All rights reserved.
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