How We Sold Our House in a Week - Part 2 (Pricing)

As we made our plans to sell the house, we ended up with two priorities: price the house right and make it look as stunning as possible.  I'll break that down and talk about pricing first.

I didn't depend on my realtor alone to price my home correctly.  I wanted to make sure the price was consistent with our strategy, so I did it myself.  I considered the money we were going to pay him as a marketing fee, since he would make sure the listing was put on the MLS and posted elsewhere, and would also do all the showings for us.

When deciding on the list price, we based it on the prices of sold properties close to our home that were very similar to our own, in size and condition.

I Used Sold Prices to Decrease Our Days On Market (DOM)

I knew I couldn't just look at homes that were for sale in my neighborhood and pick a similar price.  That doesn't tell me what the houses are worth - it tells me what homeowners are asking for.  The difference between what a seller is asking and what a buyer will pay usually correlates to how many days it will sit on the market. 


Looking at homes that have sold will tell you exactly what the market says the house is worth, and will cut down your days on market significantly.  You usually won't need to drop your price to compete with the market - you'll come out of the gates priced that way already.

Zillow.com is a great  free tool, and you could use that almost exclusively.  You can enter your home address and on the side bar can choose to look at similar homes for sale, or similar homes sold.  Look at homes SOLD.  We also used our county assessor's website, which happens to be one of the best in the country.

Finding Comparable Homes in Size & Condition

So I used Zillow, and found several properties in my neighborhood (within about a square mile) that had sold in the last year (more recent is more accurate).  I only looked at houses that were similar to mine in size: number of bedrooms, bathrooms, garage and square footage.

Next, I looked at the condition of the homes on my list.  This is the trickiest to do, but also the most important.  Whether a house is old and ugly or modern and new makes a huge impact on the price, and therefore on the price of your house.  You want to price your house based on houses that were basically in the same condition as yours.

To find our comparables ("comps"), we picked the houses with conditions most like our own home.  Our home was remodeled, almost completely redone.  There were more than a few updates, but most of our updates were average and not high-end.  So I looked for houses that looked/sounded about like that. I looked at pictures and read descriptions that are part of each house's profile on Zillow.

Breaking it Down to Price Per Square Foot

Now we had our comps: houses recently sold, in our neighborhood, about the same size and in about the same condition as ours.  Next I figured out the price per square foot that each one sold for.  I took the sales price (e.g. $100,000), divided by the square footage (e.g. 1900 sqft), and got the answer (e.g. $52/sqft).  I did this for each house that we were using in our comps, and then came up with one average price per sq foot.  In our case, most homes that were about 3/2/2 and 1900 sqft and nearly completely remodeled with some new larger items (like roof and A/C) sold for about $76/sqft.

But we were conservative: we priced at $74/sqft.  We made sure that our price was about $5000 lower than any other home similar to ours that recently sold. I think this was the key to our pricing: make it just a little bit lower than other homes.

That's as accurate as we could manage, and it worked out well (when we discussed it with our realtor, he thought it was a good number, too).  Pricing it $5000 less than similar homes were selling for meant that it was a real deal, and we had a full price offer after one showing.  Even though we could have waited 3-6 months and gotten more, it would have been about even, since every month we had to pay our mortgage, insurance, taxes, utilities, etc.  Not to mention all the time lost, waiting and having to keep the house immaculate.  We were so grateful that everything came together, and that our part in it all seemed to have worked.

I'll talk about what we did to get the house ready (and "look as stunning as possible" - our second priority), in the next post.