How to Price a Home for Sale After or During Divorce
Uncontested Divorce Mediation
Posted April 15, 2020
When a couple owns a home jointly and then decided to divorce, there is some important decision-making ahead. Will one person keep the house, along with the mortgage and maintenance costs, or will you sell the house and split the proceeds? Often, the simplest and most beneficial answer is to sell. However, conflict can arise again when it comes time to price the home. While it’s smart to seek the best price you can get, pricing the home initially is an important first step to attracting buyers and winning bids. But how do you correctly price your home for sale?
Today, we’re branching out of our comfort zone of divorce law to share a few helpful divorce-finance tips on house selling. Selling a home, there are dozens of best practices for a seller to follow. Inspections, repairs, touch-ups and staging are all essential to the process. Getting good photographs and building an inspiring listing are important. But the most important choice you will make is pricing the home for listing.
The price you ask for will influence who shops for and sees the home, who considers your home an opportunity, and how well your home competes with the local market. But how do you price the home? What is the best number to inspire buyers without missing out on value? This article will help you break down the elements of pricing a home so you can find that number and the range in which you could reasonably negotiate.
Get an Appraisal
Banks have their own concrete way of defining a home’s value. They look at the appearance, condition, and features of the home while often excluding an estimation of location and sensational value. Appraisals will usually come in low, especially first-appraisals before you’ve made all your improvements, but they will give you an excellent number to start with. Consider getting an appraisal as your initial move for estimating the home’s market value.
An appraisal also has two additional impacts. First, it influences how much banks will give to your buyers for a mortgage. Which leads to the second purpose: cluing you in on improvements to make before listing the home on the market.
Now that you have a starting number, it’s time to collect some information. The value of your home will be based largely on a few key stats. Of all the things about your home, location is the most important.
- Location is the single most influential factor of your home cost. The amount that other homes have sold for in your neighborhood and possibly even on your side of the street will influence how much your home can sell for. The home prices in your state, your city, your neighborhood, and your street will set the range. The more you know about home prices in your location, the better.
- Number of rooms, bedrooms, and bathrooms influences the price of the home as well. Number of bedrooms, in particular, is one of the leading rules of thumb. Buyers will look at the room count as a basic statistic to quickly determine how large your home is and how large a family it could house.
- Square Feet
- Square footage, of course, is the ultimate determiner of how big the home is. Lot size, home square feet, and size per floor will all matter to your buyers and can influence the amount you can ask for.
- Amenities can include a wide range of features. Basic appliances are amenities, and new appliances are worth more. But not as much as you might think. Large tubs, walk-in showers, custom carpentry; all these things can add in a small way to the value of a home.
- Finally, the age of a home can influence your listing price. Newer homes are often worth more, as older homes have old pipes and other maintenance and quality concerns. But a historical house may raise in value again.
Do Your Research
The next step is market research. You can learn a lot by examining the listing and selling prices of other homes near your own. Try to keep your range of search within a mile or less to get a precise read on home prices in your neighborhood. Check back within five years of home sales nearby.
- Sold Homes are the True Market Prices
- If you want to know the home prices that sell, look at recent sold home prices. Don’t base your selling price on homes currently on the market. Those are the ones that haven’t sold. Instead, focus most of your research on the price that local homes have sold for.
- Unsold Homes as Market Competition
- However, unsold homes are the ones you’ll be competing with on the open market. Take some time to look at their listing prices, descriptions, and photos to figure out how to attract buyers better than the competition.
- Withdrawn and Expired Listings
- Lastly, take a look at listings that have been withdrawn or expired recently. These are the examples you want to avoid. Don’t make the same mistakes.
Know Your Neighborhood Range
After doing local research, you’ll have a good sense of the home price range in your neighborhood. This is the range that buyers will reasonably expect and be ready to negotiate in. It will also relate to the appraisal price of banks. Take the lowest price a home has sold for in your neighborhood in the last five years and the highest price in the same range. These two numbers define the widest range.
Then add all the recent sale prices together and divide them by the number of sale prices added. This will give you the average home sale price in your neighborhood. Within these numbers, you’ll find the price you will eventually list for and the range you should reasonably accept in negotiations.
Work with a Good Listing Agent
- Knows the neighborhood
- Experience selling local homes
- Attention to detail
- Good rapport with you and family
Listing agents have experience in valuing a home and helping sellers find the right price to attract buyers. Of course, not all listing agents are the same. Sellers will want to interview several listing agents before choosing the right one. First, you need a listing agent with experience in the area and attention to detail on what influences a good listing price. Your listing agent should know that finding the right price is a process, and that repairs and inspections are part of that process for most home sales.
You also want to find a listing agent that you work well with. The two of you will be working as partners to make the home as salable and desirable as possible. This is an important partnership so you need a listing agent that you get along with and enjoy working together with.