When you’re getting ready to sell your home, you want to make sure that you start with the right asking price. Setting the right price will make your home more appealing to the maximum number of buyers possible. This article will define asking price and explain how you can determine a reasonable asking price when it’s time to sell your home.
What Is An Asking Price?
The asking price – also referred to as a listing price or list price – is the amount of money a seller would like to receive for their home. The seller and their real estate agent come up with the asking price as a starting point for potential buyers.
It’s important to understand that the asking price isn’t necessarily the amount the seller will receive for the property. Instead, the buyer and seller will negotiate to come up with the final selling price.
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What’s The Difference Between Asking Price Vs. Selling Price?
The asking price is the amount the home is listed for, while the selling price is how much the property actually sells for. These two numbers could be the same, but in most cases they’re different.
As a seller, if you’re listing your home in a seller’s market, and the property is in high demand, you may be able to get a bidding war going. This will drive up the final cost of the home. In some cases, you may even want to set your asking price lower to attract more buyers. This could potentially allow the bidding war to drive the price up to the higher price you were originally seeking.
In a buyer’s market, the selling price could wind up being lower than the asking price. Since fewer buyers are looking for homes, you may not have as much leverage to negotiate for a higher price. When that happens, you may need to start with a more competitive asking price to attract more buyers or be willing to negotiate with a potential buyer.
The more balanced the market, the closer the asking price and selling price will be to each other.
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How To Set The Asking Price On Your Home
There is an art to determining the asking price of a house you’re selling. If you set the asking price too high, you may have fewer interested buyers, causing the house to stay on the market longer. Here are a few steps you can take to determine the asking price:
1. Consult With Your Listing Agent
A listing agent, also called a seller’s agent, is a real estate professional representing the seller in a real estate transaction. Your listing agent has access to market data, real estate experience and an understanding of the local real estate market, so you should ask for their professional advice when setting the asking price.
2. Assess Current Market Conditions
The current real estate market conditions can also help you determine the asking price of your property. For instance, if the economy is strong and there’s a high demand from potential buyers, you’ll be able to set a higher asking price.
3. Review Real Estate Comps
Real estate comps are recently sold homes that are similar to the property you’re trying to sell. Seeing what comparable properties in your area recently sold for can help you decide how much to list your house for when it comes time to sell.
4. Get A Home Appraisal
While usually required by a home buyer’s mortgage lender, getting a professional appraisal can help you set your home’s asking price.
During a home appraisal, a professional appraiser will determine the fair market value of your home. Appraisers determine the fair market value based on the age and condition of the house, any upgrades you’ve made to the property and how it compares to similar properties in the area.
Since an appraisal is an unbiased look at your home, it can be a helpful factor in determining the asking price when you’re getting ready to sell.
5. Finish Home Improvements And Renovations
Potential buyers want to purchase a home that’s as move-in ready as possible. So if you have any incomplete home improvement projects, finishing these can increase the value of your home. If you don’t have the time and resources to make repairs or improvements, you may need to factor that into how high you can set your asking price.
6. Prepare To Negotiate
Depending on the market conditions, you should be prepared for potential buyers to try to negotiate the home’s asking price. Setting your asking price to align with the market will help put you in the best position to negotiate a good offer.
The best way to prepare for the negotiation process is by working with a great real estate agent. An experienced listing agent will know a good offer when they see one and can recommend when you should ask for more money.
How Much Above Or Below Asking Price Should You Offer As A Buyer?
If you’re a potential home buyer, you may wonder how much above or below the asking price you should offer on a house you’re interested in. The offer price will vary depending on the real estate market you’re in.
- In a seller’s market: It’s hard to offer less than the asking price in a seller’s market. You’ll likely be outbid by another buyer, or the seller may not even consider your offer.
- In a buyer’s market: You have more room to negotiate in a buyer’s market, but you should still tread lightly. If you make a bid that’s too far below the asking price, you risk offending the seller. Instead, you may want to request seller concessions as an alternative to a lower selling price.
You should ask for your real estate agent’s guidance when making an offer on a house, and consider how badly you want that house. If you want to make sure your bid is accepted, offering a little bit more may be worth it.
The Bottom Line
The asking price is the amount a seller would like to receive for the property they’re listing. As a seller, you should work with your listing agent to determine the asking price for your home when it’s time to sell.
If you’re a home buyer, you can get initial approval from your mortgage lender ahead of time. It can help you determine how much you can really afford when you’re ready to buy a home, no matter what the initial asking price is.
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Jamie Johnson
Jamie Johnson is a Kansas City-based freelance writer who writes about a variety of personal finance topics, including loans, building credit, and paying down debt. She currently writes for clients like the U.S. Chamber of Commerce, Business Insider and Bankrate.
