The three best strategies to price a house are to:
1. Get An Appraisal
2. Drive and Research Your Neighborhood
3. Look at "Recent" Sold Comps (in a buyers market you want last 2 months or less depending on your area if you can even find any...)
Use all three of these methods. Don't just use one!
Other strategies to look at are the 5 Day Home Auction or Round Robin Method. This lets you know how much someone will pay as you start with a low price around 70% of your homes value to attract buyers. The low price attracts a lot of people and you end up with anywhere from 3-6 serious buyers bidding up the price. All this takes is a week, which is nice.
A fifth way is a CMA or Cost Market Analysis which costs around $300. We don't recommend this option as it costs around the same as an Home Appraisal. When pricing a house its best to use the best three methods together, don't just go with the 1 appraisal. And if your doing the Sell Your Home in 5 Days Method, your house will be priced based on the buyers you get to your open house auction.
Get A "Full" Appraisal
This is usually around $200 - $400 and will depend on your property and geographic location. This is the best way to price your house because appraisers don't have a financial interest in your homes value. Make sure you get a "FULL APPRAISAL" and not a Desktop Appraisal or "Pencil Search". Desktop Appraisals or Pencil Searches aren't as in depth as a full appraisal and therefore not as accurate. They don't even come to your house to appraise or look at other houses when comparing. There just at their desk comparing info online.
Don't confuse a BPO or Brokers Price Opinion as an Appraisal. BPOs are usually done on homes that went into foreclosure and the bank is getting the house back. Full Appraisals are where the appraiser comes to the house and looks at stuff and compares other houses by driving by and takes multiple pictures. A Full written appraisal will present irrefutable evidence to a seller that the price was arrived at in a scientific way rather than pulling figures out of thin air. Agents do have a financial interest, that's why its best to stay away from playing the CMA games with them.
Appraisers are legally liable for any mistakes they make. So they want to price your house as accurately as they can. Use an Independent Appraiser and not one that works with a real estate office. The best Appraisers hold a professional designation. The most widely known designations are SRPA, SRA, and MAI. These designation are issued by the Appraisal Institute, and demonstrate an appraisers commitment to continuing education and ethical standards. The standards required to obtain these designations exceed those set forth by state licensing/certified requirements.
Be sure to let the appraiser know you are selling your own house For Sale By Owner. You want to get an expert residential appraiser not a commercial or BPO specialist for foreclosures. The best way to find the BEST Appraisers is to go to the AppraisalInstitute.org. Type in your zip code and pick a couple to interview. Make sure they have Residential in their Property Types.
Drive & Research Your Neighborhood
You should do this with two people and make a game out of it. Try guessing the price each house is trying to sell for. You'll know what its selling for if you grab their flyer from the flyer box, call their number on their sign, even if its an agent. Drive your neighborhood to see what other homes are for sale in your neighborhood, and if their similar to your house, look at the price. This is the same thing buyers do when their looking to buy. Look at the 5-10 of the closest houses that relate to your house. Similar beds, baths, square footage, lot size, backyard, other features. You can get the Sunday paper for your area and check out all the open houses closest to your house.
There's no need to go any further than 1 mile from your house if your in the city. If you live in the country you may need to travel farther. When driving the neighborhood, look for Real Estate Signs, grab the flyers in the flyer boxes. Pretend that your house hunting! Get into detective mode and call the real estate offices and ask them for a list of the homes which have been sold in your area within the last 3 months. Find out what price they were listed at, what they were sold for, and how long they were on the market. If an agent asks questions, tell them you just want to see if this house is priced right that you saw at an open house. If agent asks for your info, you can make up a name but then again, everyone has caller id. You may not call the agent but driving your neighborhood is absolutely necessary. You have to do this!
Also, keep a list of your homes. When you go out make sure to bring a notepad to take notes on these houses your researching. Write down the address of each house that's for sale, that's relative towards your house. Write down what you like about their house and any notes if it has a leg up on your house. That will help you to make improvements on your house. If another house has a new kitchen and you expect your house to sell for same price, but both houses are relatively similar in every other aspect, your probably going to need to do some updates to your kitchen as well and look at other possibilities that would make your house better than the one with the updated kitchen.
Get Current "Sold" Comps
Companies like Real Quest owned by First American Title have online tools to price your house. These AVM companies usually do provide accurate information as they go off the real estate closings (houses that just closed or sold). Since First American is the largest title company in America, they have one of the largest databases, and most up to date AVMs. But, they don't let You customize how the SOLD COMPS are generated when you just buy a single report. So its hit or miss. The report may give you some really good and accurate homes to compare your house to and maybe not. The reports on Real Quest are $9.99. Just click on sellers when you get to Real Quest, enter your property info, be sure to put commas in the right place. Once it brings it up you can click on it and if you want, proceed to buy the report.
Other AVMs to use are Electronic Appraiser. You can also go over to Zillow. Your not interested in the Zestimate. Those prices are usually not as accurate. Just enter your address. When the new page comes up, scroll down and look towards the bottom right. It will say Recent Comparable Sales. Click on the link below that that says, See All Comparable Homes. Look for homes that are close to your size and location. You want to make sure apples are compared to apples. You want to look at properties similar to yours. They have to be the same beds, baths, sq. ft of house, lot size, properties "SOLD" in your neighborhood in last 3 - 6 months at no more than 1 mile away, in some cases less.
Drive by these properties that sold and see how they compare to yours. All your trying to do here is see if theres any relevant data on recent homes that just sold to give you an idea of where the markets at. If your house is in an area where a lot of the houses are similar this option works well. If your an in area where houses aren't similar and each area varies from block to block the prices it returns back might not be as accurate.
CMA - Cost Market Analysis
Don't use this option. A Cost Market Analysis is done by a real estate agent or broker. They usually charge $300 for this. If you have a friend in the biz and they don't mind, take em up on it. Just be sure there not throwing a RANDOM GUESS on what the price is. If you don't have a friend or relative that's got their license and has access to the MLS info, your probably stuck paying for this. If you try and call an agent and do this they will want to ask you all kinds of questions.
One thing they'll try, is to figure out what you expect to get for you home by asking you a lot of questions prior to giving you your estimate of your homes value. Then they adjust the value higher to match your expectations. What the agent does is look at the MLS information on SOLD properties that are closest to your home and compare them. They try to find the closest match to properties sold that match your house. They compare location, bedrooms, baths, Year of Construction, Garage, square footage, lot size, views, features, etc... They should be comparing apples to apples. Depending on the in depth study they do, a different brokerage may get a totally different price. Your also paying $300 for this, so you may as well pay that to an Appraiser. The major reason we don't recommend a CMA is because the agent might price you house high on purpose and then call back in a few weeks to see if you want a "professional agent" to sell your home.
5 Day Auction Method
The Sell Your Home in 5 Days Auction Method tells you your price based on what people are currently willing to pay for it. You will find close to your highest price because there will be 2-5 buyers or so all competing for the same house. If someone wants the house, they will outbid others to get it. To learn more about this strategy you can buy the book How To Sell Your Home in 5 Days, 3rd Edition on Amazon. There are all kinds of people trying to sell courses on this for around a thousand dollars. Just buy the book. The book is missing some key marketing points but covers everything besides massive marketing.
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