How List Prices are Determined and What Closing Costs Are

Posted by Round Table Realty on Thursday, October 7th, 2021 at 11:53am.

 

Your Realtor should be an expert in pricing your home for sale! Many factors go into determining your home’s listing price, but using a few specific details and some strategy, you might be surprised what a good Realtor can help you earn for your home. Here are a few of the first things your Realtor should look for:

  1. Comps

The location of your home will also help your Realtor identify which homes have recently sold and whether or not they might affect the list price of your home. If your home is similar to a home two blocks over that sold for $250,000, you can guess that your Realtor will not suggest you list it for $315,000! Most Realtors have access to proprietary programs that help them use these comps to narrow down your home’s value. 

  1. Location, location, location!

The value of your home’s location is based on things like schools, entertainment, interstates, and even grocery stores. How busy is the street, is it near train tracks, is it on a cul de sac? And how about things like crime and local economic growth? These are all factors involved in determining the value of your home. 

  1. Condition

Your home’s age is not necessarily indicative of its value. Updates, upgrades, renovations, and improvements mean a 30-year-old home might be just as valuable as a 5-year-old home. Your Realtor will know how your home’s condition will affect its list price. An office that could be converted to a bedroom, new windows, or a recently renovated bathroom might be just a few things your Realtor figures into your final list price. 

Strategy

Once those three things are calculated, it’s time for strategy. Listing a home too high could eventually lead to a number of problems. The first is that if there are no offers at the higher price, lowering the price doesn’t send a great message to future prospective buyers. The second is that while you might be able to get it under contract at the higher price, it might not appraise. If a buyer is financing the home, a bank will not allow them to borrow more than what they find the home is worth. Unless the buyer has the cash to close the gap, the deal will fall apart. 

Listing a home too low, of course, could undercut the amount your sellers earn from the sale. 

There is a sweet spot. Your Realtor should know the best strategy for pricing your home and be willing to explain it to you. 

Closing Costs

Closing costs for sellers sometimes depend on the market. If it is a sellers’ market, oftentimes the buyers will offer to pay some of the seller's closing costs! If it’s a buyers’ market, the sellers might offer to pay for some of the buyer’s closing costs. 

Traditionally, the sellers might share closing costs with the buyers. These costs could include the transfer tax, title insurance, escrow, property taxes, HOA fees, attorney’s fees, and Realtor commissions. These could be anywhere from 8-10% of the home’s purchase price for the sellers. 

While the closing costs can get pricey, the money typically comes from the sale of the home for the sellers, meaning they don’t have to come to the closing table with cash. With enough equity in a home, this is rarely a financial deal breaker for sellers. 

At the end of the day, the market and the buyers will determine the price of your home. But using a Realtor with experience will help you price your home and negotiate closing costs in a way that leaves you a happy camper at the closing table!

 

 

 

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