How to Price Your FSBO Home

For Sale by Owner Homes Pricing Guidelines

General Rules for Pricing Your FSBO Home

As much as you love your home, emotional attachment to a property makes pricing a home very difficult. Often times, people are confused about what will and will not add value to their home for sale by owner. We offer these general guidelines to help in the pricing of your home, the single most important factor in determining whether your by owner home will sell quickly.

Home values are generally determined by the market price per square foot of properties similar to yours in size, location, condition and amenities. Typically, the higher the home's square footage, the lower the price per square foot.

If your home is located in a newer neighborhood, it may be easier to find similar home valuations in your neighborhood. If a home is very similar to yours, the value should also be similar. Older home values tend to vary depending on updates and renovations.

Other properties in your neighborhood will be a determining factor in your home value for another reason – the value of very expensive homes may be decreased by smaller surrounding homes, and the value of smaller, less expensive homes may increase if surrounded by larger properties.

Selling a Newer Home?

If your home has been built in the last three years, your home has likely not appreciated in value quite yet.

Unfortunately, in new neighborhoods, sellers often are competing with builders who are still developing the neighborhood. If buyers can purchase a brand new home, and select their preferred floor plan, colors, upgrades and finishes, they will more than likely choose that option. Sellers in this situation will need to price their home 5-10% less than the builder's price in order to compete with newly constructed homes. You'll find, as the above chart depicts, that if you will only live in your home for a short time, it's best to purchase an older home. However, if you're planning on living in the property for quite a few years, a newer home is the smarter financial decision.

Common Upgrades & Their Affect on Your Home's Price

Desirable Lots. If a lot is oversized, or has other desirable features, it will increase what your home is worth. To price homes on premium lots, figure out what the home would be worth if it weren't on the premium lot. Then add the difference in lot value. Make sure you capture the lot features in your listing photos so potential buyers know what the difference in price is based on.

Swimming Pools. Pools are a significant investment, and while they do add some value to your home, it's nowhere near what you paid to have the pool installed. So, install a pool only if your family will be able to enjoy it for a long while, and when you're selling a home, add $10,000-15,000 to the home value for the pool.

Remodeled Garage. Creating a livable room out of the garage does not add value to a property. While you've gained a room, you've lost a garage. Deduct the square footage of the remodeled garage from your total home square footage. Multiply the remaining square feet by the market price per square foot to obtain the value of your home.

Price Your Home to Sell

The lower the list price of the home, the more showings and offers you will receive.
The first 2 weeks that your listing is active is the best chance you have to sell your home for full list price. (A buyer might fear another buyer swooping in and offering more on the property, so they'll offer full price.)
If your property is not getting many showings and you've not received any offers after several weeks on the market, your home is priced too high. Assuming that you have good pictures for your listing and there are no unreasonable barriers for showing the property, there are no exceptions. Lower your list price by 3-5% and see what happens.
Don't bother offering monetary incentives to buyers (money for repairs, paying for closing costs, etc.) Simply lower the list price of your home by this amount, and you'll get more potential buyers through your doors.
If you're lucky enough to get a full-price contract on a home that's overpriced, beware that an appraisal could ruin the sale. Lenders will not lend more money than the property is actually worth. Additionally, in most standard sales contracts, you'll find a clause that allows the buyer to cancel the contract if the property appraises for less than the sales price.
If a listing is 3-4 months old, and the seller hasn't reduced the price at all, this is a good indication that the seller isn't serious about selling the house, or there's something wrong with the property. Most agents will steer their clients away from these listings.
Don't offer more or less than the standard 3% for buyer's agent commission- if you offer less, agents may steer clients away from the listing, but if you offer more, it's difficult for an agent to steer clients towards a particular listing.
If you're getting a lot of showings, but no offers, there's an issue with your property that buyers can't see until they've visited your home. Perhaps a pet or smoke odor, or a challenging floor plan, these issues must be overcome, if they cannot be fixed, by a reduction in price.
If you're getting a lot of scheduled showings, but potential buyers don't actually come into the house, there's an issue with the property that's visible from outside the home. Often times, the home location (backs up to or faces a busy street or highway) is the issue, or it can be a visual issue (unsightly power lines.) Again, these issues must be met with a reduction in price if they can't be fixed.

Think You Need Professional Pricing Guidance?

Appraisers

This will be the most accurate, but most expensive, professional pricing opinion option. Evaluate what its worth to you to sell your home as quickly as possible, because pricing your home incorrectly may cost you a couple months. Is it worth $300-350 to get an accurate valuation? (If your property is older, this may be a good option as older homes are much more difficult to value.)

Realtors

Realtors will provide you with a CMA (Comparable Market Analysis) for your neighborhood, most likely at no cost. These are a valuable tool, but be aware that any agent may have a personal agenda that can taint those numbers. One may be looking for listings that are quick turnarounds, and may suggest a lower than necessary sales price. Another might try to flatter you in order to land the listing, and will suggest an unobtainable listing price.

For Sale by Owner Homes

Just like Realtors, we have access to CMA data, and will be glad to offer you this information at no cost. Be aware that the cost for our flat fee services are exactly the same for every house, no matter what the sales price is, so our data will likely be more reliable.

As we mentioned previously, newer homes are easier to value, and homes in older neighborhoods have more variance due to renovations, upgrades and upkeep.

What if My Home Won't Sell For Enough to Cover My Mortgage?

Not only should you consider the cost of your mortgage, but also any buyer agent commissions and closing costs you'll have to pay when calculating how much you need to sell your house for. Regardless of the number you come up with, what your house WILL sell for is a totally different number. Often times, people discover that what they need to sell their house for is more than what the market will bear. If waiting until the market turns up isn't an option for you, and you need to sell your house now, we advise clients to look into a short sale. For more information on short sales, take a look at our Short Sale Solution page.

For Sale By Owner Homes For Sale by Owner Homes listed in the Realtor MLS for as low as $299!