When selling a house, there are two primary prices that you can examine: the listing price and the closing price.
The listing price is the price you give your home when it hits the market. It’s a seller’s anchor point to see if homebuyers will negotiate.
The closing price is the price your buyer pays at closing. There are multiple influencing factors that determine how a home shifts from its listing price to its closing price.
In order to determine your home’s listing price, take these steps:
1. Know Your Property’s Characteristics
Determine your home type (single-family, condominium, duplex, etc.); the number of bedrooms and bathrooms; and the price per square foot.
- To calculate your price per square foot, take your home’s listing price and divide it by square footage.
Math example: When Jane bought her home in 2015, it was 1,500 square feet with a listing price of $250,000.
Divide the home’s listing price by square footage: 250,000/1,500 = $167 per square foot
Since similar homes in Jane’s area are selling for $80,000 more than their original listing prices, she should take these factors into consideration when she chooses a new listing price.
2. Browse Your Market
Visit listing sites like Zillow or Trulia to compare sale prices of local homes that are similar to yours. Your listing price may be higher because your house has certain key characteristics.
According to Zillow, in a seller’s market, you can list your home about 10% higher than the comparable properties in your market.
In a buyer’s market, stay competitive and sell for a lower price than the relative listing price of competing homes.
3. Calculate Your Potential Earnings
Use the Opendoor calculator and plug in what you think the listing price will be. Subtract the total cost to sell, which includes any agent fees, taxes, capital gains taxes, repairs, and remaining mortgage amount.
4. Chat With an Agent
Your agent can conduct a comparative market analysis (CMA), or help you pinpoint your home’s relative value. The benefits of working with an agent include insider knowledge of the local market, negotiating experience, and familiarity with selling homes similar to yours. An agent’s personalized experience can impact the closing price, and ultimately, the money that goes into your pocket.
Disclaimer: This post was not written or reviewed by a professional financial advisor, and the suggestions should not solely be used to make financial decisions.
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