Pricing your Home as an FSBO
Using comparable homes is an excellent way to establish pricing for your home. Comparable homes are those that most closely resemble your own. The trick is to use only the homes that are close to identical to yours. Things to keep in mind are size, style, condition, area, etc. Comparing a two-storey home to a single floored home obviously won't do, and the value of a 50 year old home is not comparable to that of a 5 year old home. Be realistic.
Here are the top 4 value setters:
1. Similar Square Footage.
Appraisers compare homes based on square footage. A two-storey home is generally worth less per square foot than a bungalow because it costs less to build up than it does to build out. So match your home style first. Comparable homes should not exceed a difference of 200-400 square feet. The closer the better!
2. Similar in Age.
Ideally, the age of the home (the year it was built) should be within a 3-year variance with your comparables. Many subdivisions have a wide range in the age of homes. This is very common in older neighborhoods. Your home may be 5 years old, and your neighbor's may be 50 years old. Obviously the age difference will affect the value. The two homes will not command the same sale price.
3. Similar Condition, Upgrades, Amenities.
Appraisers will deduct value from your home if other homes have upgrades and yours does not. A home with a swimming pool will have a different value than one without. A newly remodeled home is worth more than with no upgrades at all. One bathroom is worth less than two. You get the point. A home in poor repair will negatively affect its value.
You've surely heard the phrase: "Location, location, location"; But have you put much thought into what it actually means? A home with a view of the river is worth more than the exact home with a view of a brick wall. A home on a quiet cul-de-sac is worth more than one next to the highway. Compare your home to those in similar locations. If your home sits across the road from a trailer court, or train tracks, or whatever, look for other homes that have the same exposure or even more undesirable locations.
The closer the comparables you decide to use are to your home, the more accurate the price will be. The house next door may not be the best choice. Location is not enough to base the price of your home. You must consider all four factors.