Pricing the house for success

You might have bought a house for $300,000, now you want to sell it and make a profit. You may be thinking about listing the house for $350,000. Wait! It may not be simple as adding a markup of $50,000. The pricing of the house depends on many factors.

Appraisal Value

I interviewed a real estate agent few months ago when I decided to sell my house. His idea was to list the house in the market few thousand dollars more than the assessed value of the house from the county. Sell the house for a value penned by an assessor who has not even seen your house? That did not seem right to me. The county assessor puts a market value for the house and a value for the improvements in the house. This value does not really reflect the value of the house always. Most of the house owners want this appraised value to be low so they can pay less tax. The real estate agent whom I interviewed gave me an idea when he saw an awe on my face. The idea was, I have to approach the Denton County office and protest to raise the appraisal value. It takes an year for the new appraisal value to be released even if I want to protest and they will agree. I was going to lose a lot of money with this Real Estate agent’s bad idea. The appraisal value reflects the base price of a house, but not the real value a house should be sold for.

Neighboorhood

The value of a house depends on many factors: neighborhood, school district, accessibility to highways, upgrades in the house, how many houses are for sale in the area. The Castle Hills community recently received a lot of attention nationally. That itself can raise the price of the house in a neighborhood. A master community like Castle Hills North with gold course, pools, play ground, schools will add more for the houses in that neighborhood.

Comparables

A lot of real estate agents don’t have their own algorithms to put a value to a house. They depend on historical data, and that is why they look at the prices of the houses that are already sold in the area. The real estate agents call it comps or simply comparable.

I interviewed another real estate to solve the pricing problem. He visited me with a bunch of comps with no data. I asked him “What price I should list my house for?” His idea was better than the first real estate whom I interviewed. He wanted me to list the house for a price that he think is appropriate, not on facts. When his irrational idea raised awe on my face, he was ready to list for any price. This real estate agent wasted my three months, the house did not sell.

I interviewed few more real estate agents, and I was impressed with the real estate agents from Keller Williams Realty. The statistics and their knowledge about pricing of a house is better than the Real Estate agents who run their own shows like my previous real estate agent.

These are comps of some houses sold in the Castle Hills North in the past two years.

Address – Year sold, Square Feet, Price
________________________________________
420 Westminister Drive – 2011, 2545, 255,000/100.20 sq. ft.
213 Sir Brine – 2012, 2598, 272,467/104.88 sq. ft.
317 Sir Brine – 2011, 2593, 255,000/98.34 sq. ft.
420 Chester Dr – 2011, 2593, 265,000/102.20 sq. ft.
201 Vagon Castle Lane – 2012, 2348, 270,000/114.99 sq. ft.
2536 Scotti Street – 2012, 2573, 290,000/112.71 sq. ft.
229 Florence Dr – 2012, 2864, 285,000/99.51 sq. ft.
116 Westminister Drive – 2012, 3095, 300,000/96.93 sq. ft.
204 Anna Avenue – 2012, 3085, 328,000/108.27 sq. ft.
216 Anne Avenue – 2012, 2906, 322,000/110.81 sq. ft.
3321 Bans Crown – 2012, 2264, 250,000/110.42 sq. ft.
108 Angis Ln – 2012, 1928, 229,000/118.78 sq. ft.
416 Westminister Dr – 2012, 2303, 249,753/108.45 sq.ft.
2612 Wales Way – 2012, 2202, 286,000/129.88 sq. ft.
229 Vagon Castle Dr – 2012, 1933, 229,000/118.45 sq. ft.

Upgrades

Just looking at the comparables is not the best idea all the time. In the Castle Hills North, the builders like American Legends and David Weekly provide many upgrades. A house in the next street of the same floor plan and by the same builder as yours might have sold for higher price. That house might have more upgrades compared to yours. A house with a hardwood floor will have more value than a house with carpet.

Floor Plan

The biggest selling factor of a house is it’s floor plan, and also the land where the house is built on. A house with a study room on the first floor will have more value. The land on the backyard is another factor.

Reference Data

Always do your math before working with Real Estate agents. Some real estate agents are good at talking, not good at mathematics. The websites like Zillow and Trulia provide a lot of information to you as a seller. These websites provides mammoth information like the houses for sale in the neighborhood, the link to the county website, school rating etc… The Denton County Property Tax website provides historical data of any home in your neighborhood.

Closing Cost

The seller has expenses to close a house sale. The seller has to pay 3% commission to the seller’s agent as well as 3% to the buyer’s agent. There is title fee and a 1.0% donation to Castle Hills Educational fund. The closing cost needs to be considered to evaluate your loss or gain on the house.

Selling reasons

The profit that comes when selling a house does not come just as cash. You may want to move to a location close to your job immediately. In situations where saving time is your profit, you may consider selling the house competitive to other houses in the neighborhood so it can sell fast.

Season

The market always works on supply and demand. I listed my house in October last year. According to my previous real estate agent, that was a bad time to sell the house. But that was not true. He gave that as an excuse when he could not help me in selling my house. The inventory of houses in the Dallas/Fort Worth market was very low at the end of the last year, and there was a great demand for houses. It was a sellers market. The market continued and I was able to sell it in February next year with a different real estate agent. Many real estate agents say the right season to sell the house is in April. That is when a lot of people relocate with a primary reason to locate a new school for their kids. Because of the availability of a lot of homes, it becomes a buyers market. The price of your house will go down because of large supply. The season matters. Sometimes it can work against the common perceptions also.

Your real estate agent can suggest a price for your house. But don’t take his advise on it’s face value. Take your own time to price the house correctly after evaluating the facts that he provide to you as well as juggling your own research data. A correctly priced house shows the seriousness of the seller. You will find success in selling a house priced correctly.

One response

  1. Varghese,

    What a great blog! I love that you are providing great information and educating others on the market. I know this will be very helpful to those individuals that might be selling in the future. It was a pleasure to work with you and I am happy your enjoyed working with our team.

    Thank you,
    Russell Rhodes
    http://www.RhodeTeam.com
    Keller Williams Realty

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