In selling real estate, how the original asking price is set determines the length of time it takes to sell and whether the investment makes a profit and how much of one. To help set a reasonable price, real estate agents who are members of the local Multiple Listing Service (MLS) can do comparative market analyses, usually for free, on like properties that have sold in the area within a year. Homeowners should be aware of some facts in helping to decide on the listing price.
If the main goal is to make as large a profit as possible, then time is a key factor. If other real estate agents and buyers see the price as too high, the house will linger on the market longer and be less likely to get full asking price.
There is a difference between value and cost. Homeowners frequently value their homes higher than the cost buyers are willing to pay. Price cannot be based simply on cost of improvements. Those improvements may not be what buyers are looking for and do not add value in their opinion. Colors may not be to their taste.
Home improvements can become outdated fairly quickly. Countertops is a great example. While pricey granite may be the latest rage, many buyers do not like the look or upkeep of granite and would want to replace them.
Improvements that were made ten years ago may seem new to the owners but be nearly ready for replacement. An example is the water heater with short life expectancy.
Flexibility is another factor. Keep contingencies out of listings if at all possible. If something does not stay with the house, remove it before buyers ever look. How soon can the current owner be out of the house to meet the buyers' needs in terms of moving in time frame? How easy is it for real estate agents to get in the house to show it? Buyers are noted for losing interest quickly if they cannot see the property immediately or at least on their time schedule. Several professional pictures and/or a video should be allowed on websites to get buyers interested. For sale signs should be put up on the property to draw more buyers.
The property must be kept cleaned up and inviting. Pets can kill a sale before potential buyers even enter a building. Clutter should be removed and stored offsite. A completed home inspection with noted repairs made before the home goes on the market will often gain a higher sales price. Become familiar with local real estate prices by looking at some comparison homes on the market to learn what the competition is like.
Usually real estate agents will have information sheets with more suggestions on getting the best price for a property. Get recommendations from friends on their success stories with local real estate companies and agents. Interview a few agents and ask them to do CMAs before making a decision.