What Buyers Need to Know About PricingPricing Guide for Sellers

Estimate Current Market Value

ForSaleByOwner.com offers a Real-Time Home Value Estimator that you can fine-tune to reflect the conditions and specifics of your neighborhood. This tool will allow you to:

  • See the sale prices of other houses in your neighborhood
  • Find out how the size, overall price and price per square foot of your home compares to other homes in the area
  • Weed out properties in the mix that really are not comparable to yours and slower sale

Agents and Appraisals

A realty agent will offer to do a Comparative Market Analysis (CMA) to identify the current market value of your house. Of course, a free CMA is a marketing tool to encourage you to list your home with that agent, so the agent will present evidence that the CMA supports a higher asking price. If you list with the agent, then she will pressure you to ‘listen to the market’ and lower your price - undermining the value of her own CMA.

The most reliable estimate of home value is an appraisal conducted by a licensed appraiser who is familiar with your neighborhood. The Real-Time Home Value Estimator provides valuable context for making last-minute improvements and estimating your equity. However, your buyer’s lender will require an appraisal. We recommend that you order up an appraisal and then set your price accordingly. This will enable you to reach a sale price that is very likely to be accepted by the lender from the get-go.

More Pricing Resources

Agents and appraisers are not the only sources of home value estimates. Here are three additional sources that can provide valuable context for setting the listing price of your home.

Federal Housing Finance Agency Home Value Calculator

This index compares the actual sale price of recently sold houses to the last sale prices of those same houses. However, it does not include improvements that may have increased the value of the properties.

Use the House Price Calculator to see the likely change in value of your house since you bought it.

Use the House Price Index to see the market trends for cities around the country.

S&P Case Shiller Index

This widely followed index tracks home price changes for 20 major markets. If you are located in one of these markets, you can be sure your buyers are valuing your house according to Case Shiller trends.


Drawing from the mountain of data it collects for lenders, FNC uses appraisals for the basis of its index. That means, that unlike the FHFA and Case-Shiller indices, the FNC index counts in home improvements that probably added value. If you have substantially improved (not just maintained) your house, and if you are located in a neighborhood where homeowners put a premium on updates, this is the index for you.

Pricing in a Buyer’s Market

It’s tough being the seller in a buyer’s market. But you can improve your odds with the right research.

1. Recognize that housing markets are local.

Home prices are like the weather - very different in different areas. In addition, demand will change depending on the price range and even the neighborhood. What you need to know: What’s the demand for a house like yours in your area? Look at comparables for similar houses. Study prices and sales for one year ago, six months ago, three months ago and current numbers. (Use the Real-Time Home Value Estimator as a starting point.)

What are the trends? Are prices going up or down - and by how much? How many days are homes staying on the market? If they are on the market longer, how much of that could be seasonal? In many areas, spring and summer are the busy seasons.

Track the houses for sale in your neighborhood by scouring online listings and visiting open houses in your area. Another reliable source: public records of recently sold properties. You will be able to see not only the price history of houses in your neighborhood, but also permits for improvements. This will enable you to estimate how much value was actually added by home improvements - and how much those homeowners recouped when they sold.

But you also need to realize that the paperwork alone only tells part of the story. While sales and prices are public, many times seller concessions are not. For example, a seller might have added in a lawn mower and snow blower, for free. In practical terms, that might have added $500 to the value of the sale, but it is not reflected in the official records.

2. Analyze who is buying and selling in your market.

What’s your competition? Who are the buyers, and why are they shopping?

Is your area growing, which supports rising house values? Or are there layoffs and foreclosures? Are you competing against a flood of new houses from builders eager to sell, or are you selling a newer home in an area where most of the housing stock is older?

3. Know what your house is worth.

Get an appraisal from a certified professional appraiser. Look at your comparables. Taken together, that information will give you a pretty good idea of what your home is currently worth.

4. Consider strategic pricing.

Here’s how it works: If prices in your area are dropping 1 percent each month, and you want to sell within the next three months, you take 3 percent off your price right off the bat. So if you were going to put your home on the market for $400,000, you set the price at roughly $388,000.

The upside: You'll have the competitive edge over the guy who’s dropping his price every month, without the air of desperation. Plus, in a market where prices are falling, you’ll make more money if you sell quickly.

The downside: Predicting the market is a tough call, even for the pros. And it’s really difficult to raise the price if your market starts to rebound.

5. Rebate the ‘commission.’

If you’re selling it yourself and need to move quickly, consider subtracting half of what would have been the commission from the sale price. The standard commission is about 6 percent, so if you subtract 3 percent, your $300,000 house would go on the market for $291,000.

6. Assess the market where you plan to buy.

If you’re selling one house and buying another, look at the market where you plan to move. Try to estimate how much you must have to buy the kind of house you want. You might be able to absorb a greater loss in selling, because you need less to buy your next house.

Estimate Your Gross Equity

Calculate the equity you have in your house, before you figure in selling expenses.

Likely Sale Price:
Minus Mortgage Outstanding:
Minus Second Mortgage:
Your Equity:

Note: If you bought your house in 2008 - 2010 and claimed a Federal homebuyer’s tax credit you might have to give back part of that credit if you sell within three years. Check your loan documents and plan accordingly.

Estimate Your Net Equity

Now that you know how much equity you have, figure out how you can keep what’s yours. Add up the transaction costs of selling on this worksheet to determine your net equity - that is, how much you will keep after all the selling costs are deducted. For most people, net equity becomes the down payment on their next house, so it’s important to minimize selling costs.

Estimate Your Net Equity

Likely Sale Price:
Full Service Agent Commission
6% of Sale Price
Buyer’s Agent Co-Brokered Commission
2% of Sale Price
ForSaleByOwner.com Package

Ancillary Expenses

Professional Photos
Staging & Touch Ups
Municipal Transfer Taxes
Printing (Marketing Materials)
Market Value Data
Commissions + Ancillary Expenses
with Full Service Agent
Commissions + Ancillary Expenses
with Buyer Agency & ForSaleByOwner.com
Gross Equity
Your Estimated Net Equity
with Full Service Agent
Your Estimated Net Equity
with Buyer Agency & ForSaleByOwner.com

Think Like a Buyer

The first step is to think like the people whom you hope will buy your house. What do they see when they look at your house? How does your house compare to similar houses that have recently sold, and that are currently for sale, in your neighborhood?

First, define your neighborhood the way a buyer would. Do you expect a buyer to look for houses in particular subdivisions? By zip code? By access to public transit? By school district? Draw up a list of characteristics that you believe are most compelling to buyers.

Next, using those characteristics, compile a list of houses similar to yours in size, style, condition and amenities that have recently sold, and that are currently for sale.

Find lists of recently sold houses by searching property tax and title transfer records for your municipality and county. (If you are not sure where to start, try the county recorder of deeds. Many records are online, but you might have to go to the clerk’s office and make copies. ) You can get some of this information from the “Recently Sold” tabs of Zillow.com and Realtor.com. These sites draw their data from MLS submissions and from public records. There is always a lag time, so you can get the latest data yourself directly from the clerk’s offices.

Find houses currently on the market by looking at listings at Realtor.com, ForSaleByOwner.com, Craigslist, and other listing services. Pinpoint those that you believe are, objectively, most similar to yours. These houses are your active competition.

Now, calculate the price per square foot for the sold houses and for the active competition. What is the difference? What seems to justify it?

Come up with a narrow range of prices per square foot and calculate the asking price of your house for several price points. Which seems best aligned with market trends in your area?

Understand the active competition.

You need to know exactly what you are up against. Get the listing sheets for the houses on the market in your neighborhood. Typically, these are readily available through Realtor.com, Trulia.com and other listing services.

Using the sample listing sheet at ForSaleByOwner.com, compare the characteristics of your house to that of the active competition. Key factors include:

  • Total number of rooms: Whether or not finished basement rooms count is a matter of local tradition. Find out for your area.
  • Bedrooms - how many and how large?
  • Bathrooms - how many; does the master bedroom have its own bathroom?
  • Kitchen - Size and condition. Is your kitchen recently renovated? Are the appliances less than two years old?
  • Garage - Attached? Detached?
  • Mechanicals - Central air? New or recently updated heating, plumbing, electrical and energy efficiency?
  • Amenities - Features such as fireplaces, porches, Florida rooms, pools, finished playrooms, walk-in closets, pools, hot tubs, perennial gardens.
  • Regional preferences - In some regions, wood burning fireplaces are much more popular - thus, more sellable - than gas fireplaces. In some cities, condos with split floor plans (bedrooms on either side of the main living area) are the preferred floor plan. Presumably you have become conversant in regional preferences by living in your area. Use that knowledge to emphasize the characteristics of your house that are most popular with homeowners in your area.

Know lending trends

You and your buyer both want the same thing: for your house to be theirs. Understand current lending standards that will likely shape your buyer’s offer. If down payment requirements are high, for instance, buyers will be strapped for cash and a house that doesn’t require any immediate spending will appeal to them - and that will support your asking price. Keep up with lending trends at the ForSaleByOwner.com lending center.

Set Your Price

The asking price you first set is a big number. It can attract buyers. It can repel buyers. It can be viewed as a starting point or an ending point.. Armed with an automated value report or appraisal (covered in steps 3 & 4) and your understanding of buyer preferences, a realistic view of the market appeal of your house, set your price!

Remember, the market value of your house is not determined by:

  • How much you still owe the lender
  • How much money you spent on improvements and/or maintenance
  • How much you could have gotten a year ago
  • What you’d like to get

The market value of your house is what a willing, able and ready buyer will pay today.

You Have an Offer!

Keep the deal on track and capture the most equity.

  • Learn (if possible) the buyer’s motivations and pressures - without disclosing your own.
  • Have documentation of recent neighborhood sales - from your ForSaleByOwner.com Pricing Estimator or an appraisal. Use this to support the value of the house.
  • In 80% of the cases, you will be better prepared than the buyer’s agent who won’t have done his homework and who won’t have a clue about your property. He will try to deal in weak generalities. You will have specifics.
  • Be prepared to walk away; when selling your home you must be prepared to turn down unacceptable offers or situations.
  • Monitor the latest mortgage rates and lending news at our Mortgage page, with fresh content delivered daily by Bankrate. Why? Because the more you understand about the lending conditions facing your buyer, the better you will understand what factors your buyer can change, and what factors you both must work around.

Accepted Offer!

Congratulations! Coming to an agreement on your home's sale price is no small feat. Now what? Before you agree on a closing date, you may want to consider adding a few days cushion in case there are delays as you complete these final steps:

Paperwork. Gather the closing paperwork required for a home sale in your state. Visit our Real Estate Forms and Guides area for the necessary legal forms for all 50 states.

Home Inspection. Most buyers will want to have a professional home inspection done before closing. Before their inspector comes knocking at your door, make sure all appliances are in good working condition and complete any necessary structural repairs that could post-pone closing. For more information on the home inspection process, go to Step 11: The Inspection.

Hire a Real Estate Attorney. If you want help preparing final contract terms, navigating the home inspection, getting title clearance and preparing closing documents, check out our Find a Pro section that will connect you with local professionals in your area.

Keep reading to find out how to pass the last two pricing barriers between you and closing.

The Inspection: Are Price Adjustments Required?

Inspectors are commonly viewed with fear by both sellers and buyers because they often find flaws that can undermine a deal or reopen price negotiations. Here is a short guide to getting the most from the inspection - and to keeping your deal on track.

Assemble for the inspector a set of receipts, drawings, municipal building permits, occupancy permits and other evidence that supports your contention that improvements were made legally and in compliance with local building codes.

Are recent improvements out of compliance with local building codes? Fix that immediately - even if you have to pay fines - to avoid an embarrassing showdown with the inspector, or, at worse, a post-sale lawsuit from the buyer.

Don’t confuse maintenance with improvements. You are unlikely to recapture what you have recently spent on basic maintenance, though the market value of the house would be severely impaired if these essentials are not in good working order:

  • Heating and cooling systems
  • Water heater
  • Foundation
  • Roofs
  • Windows
  • Plumbing
  • Electrical system
  • Appliances

Are all in good condition? Can you provide evidence of cleaning and other routine care?

Improvements go beyond keeping what is there functional and typically add value to the house. Improvements can include:

  • Kitchen remodels
  • Bath renovations
  • Additions
  • Conversions, most typically, attics and basements to living space

The Appraisal

In the recent past, sellers could assume that a solid offer validated the market value of the house and that the deal would sail to a smooth close.

Not anymore. With foreclosures accounting for up to 25% of home sales across the country, market value has become a slippery slope. Cautious appraisers are more likely to find a lower market value, further fueling the trend of declining prices - and to your concern, forcing an after-the-fact price adjustment.

Here’s how to avoid that.

  • First, know your rights. Though regulations continually change, one thing hasn’t: your right and responsibility to supply the appraiser with documentation about the house, including receipts and permits validating the worth of recent improvements and maintenance. This can be the same documentation you provide the inspector. For the latest on homeowner rights in appraisals, visit The Appraisal Institute.
  • Double-check that the bank-assigned appraiser is familiar with your neighborhood. If the appraiser is from a different area, request that the buyer get an appraiser who knows your market.
  • Be there for the appraisal, to answer questions and to make sure the appraiser sees house features that you believe are of particular value.
  • Review the appraisal for accuracy. The appraiser might have the wrong square footage or overlooked valuable features of the property.
  • Work with your buyer to make sure the appraiser is fully informed as to the features and value of the house. You are on the same side to ensure that the appraisal supports the offer.


Once you've gone through the home inspection and appraisal process, you're nearly done. Here's a simple checklist to get through closing:

  • Repair anything agreed to from the home inspection and bring the receipts to closing
  • Notify your utility companies of a final service date
  • Research moving companies and schedule movers
  • Schedule cancellation of your homeowner's insurance for the day after the transfer of home ownership has been recorded
  • Gather keys, security codes, garage door openers, warranties and instruction books for appliances, heating, cooling and plumbing systems to give to your buyers
  • Bring a photo ID, driver's license or passport to closing along with a certified check, if required, in the amount told to you by the attorney

Moving into a new home? Here's how to coordinate a closing and a move on the same day.