If you have an older home, you may find it difficult to pick the absolute right listing price. If you overprice the house, it will lose its appeal after the first two to three weeks of showings, with lost interest and demand by the third week. On the other hand, if you price your house too low, you will get multiple offers, which in turn can drive up the price to market. Pricing an older home is about supply and demand, and is part science and part art. Here are some of the factors that go into calculating listing prices and what you can do to feel confidence about the selling price of your home.
The Value of Land
Older homes tend to depreciate in value unless you renovate and modernize them to match the equivalent amenities in newer homes. However, the land on which an older home is built usually appreciates in value. Older homes have also typically been built on larger lots, which are becoming increasingly in short supply.
Here the laws of supply and demand play an important role and as the supply of land is limited, its price increases over time. Unless an area becomes unsuitable or something happens to limit demand for a given area, the land itself will increase in value over time.
Location, Location, Location
Image via Flickr by S.A. Street Photographer
The location of your home plays a significant role in its listing price. Homes that are in more desirable school districts and in cul-de-sacs with traffic limitations are usually in higher demand than houses found on busy roadways.
In addition, home buyers with children will also look at the average age of people in the neighborhood. These home buyers will tend to stay away from neighborhoods with older homeowners who often do not have playmates for their children.
Compare House Prices
You can also determine the listing price of your home by comparing it to the prices of houses on the market built during the same time and having similar square footage, within a 10 percent variance up or down from your property, within your neighborhood. These houses should be no more than a one-quarter to one-half mile radius from your home and even closer if there are physical barriers and dividing lines in the neighborhood such as highways and major streets.
Then look at the prices of these homes that are now listed or have been listed over the past three months, as appraisers do not look at prices older than this. You can also research the history of withdrawn and expired listings to determine whether any were taken off the market and then put back on the market. You can compare the original list price against the final sales price to see if there were any reductions in price and compare ratios between the two prices.
Pricing an older home is not something that can be set in stone as many factors can come into play when selling or buying a home, and you can’t always anticipate all of them. If you are flexible and able to react to new information and changing market conditions, you’re most likely to get a price close to your asking price with the least amount of stress.