Avoid these fundamental mistakes when listing your next home

Key Takeaways

• Unless you’re selling a carbon copy of a home that recently sold, nobody knows for sure what that home might sell for.
• Variables such as funky floor plans, basement square footage, and garage size can significantly affect the value of similarly sized homes.
• A neighbor’s lack of curb appeal can have a huge impact on the price a home will sell for.

Here is a secret that nobody tells you in real estate school: Unless you’re selling carbon copies of homes on the same street, nobody knows for sure what a home will sell for. There are too many variables. To fully understand how to price a home, you need to understand all the facets that could affect the value of the home.

Here are 5 common variables that agents fail to consider when selecting a list price:

Funky floor plans – When agents look at comps in the area, they look at properties that are a similar size, have the same bedroom count, are in the same vicinity and neighborhood, etc., and therefore list their assigned property at a similar price. But if the home has a really funky floor plan, it’s going to sell for a heck of a lot less.

In that case, you say to the sellers, “This floor plan is not ideal for most buyers and they may only choose this home if you’re priced below other alternatives.” And most of the time the sellers will agree. That might be half the reason why they’re moving — because they’re sick of the layout of the house and they want a better setup.

Basements – Agents often attribute the same weight to the square footage of a home that doesn’t have a basement to one that does. Let’s say you’re talking about two 2,000-square-foot homes. One has 1,000 square feet above grade and 1,000 square feet below grade; the other one has it all above grade. Those houses are not similar at all. They look similar on paper, but they’re not similar in the price a buyer will pay for those houses. Which is why most appraisers don’t compare homes that have basements versus ones that don’t. If you only have a limited number of comps to choose from, a good rule of thumb is to reduce basement square footage by 50-75% when comparing homes with and without basements.

Yes, in some cases, basements are desirable. However, in most cases, people prefer to have the square footage above grade. Usually it’s more expensive to build a house above grade than it is to include a basement. Many basements have low ceilings, tiny windows, and undesirable living spaces which can throw off your list price if you don’t account for it.

Price per foot – Many agents were taught to get a list of comps and compare their price per foot to help determine what homes in that area should sell for. They’re told to present those figures to their clients. Example: “Houses in the neighborhood are selling for about $125 per square foot,” or whatever the number is. I’ve seen this tactic burn so many agents and sellers over the years. So let me be blunt: Just don’t do it.

Price per foot doesn’t account for the quality or condition of the house, the appeal of the floor plan, the bedroom count, ceiling height, or amount of windows. Square footage doesn’t account for the size and condition of the yard or anything outside the house that adds value for potential buyers. Most agents know how much staging and the home’s condition affect sale price and desirability, so why compare homes on a per foot basis?  

Garage size – Even though it has a one- or two-car garage, how practical and functional that garage is means a lot to potential buyers. Two similar houses might have three-car garages, which seem like nice features, but one of them is extra deep and has a lot of built-in shelves, workbench, and space for parking bigger trucks. The other one might be very shallow and very cramped. The buyer’s going to pick the one with a bigger garage, and/or pay more for that home because they value that feature. Yet agents often attribute the same value for both homes when determining list price.

Curb appeal – First impressions are so important. When you first pull up and look at that house, pay attention. Buyers make quick judgements on homes. It’s always great if sellers focus on having great curb appeal. However, sometimes the problem is not the agent’s listing, but the home next door.   

If the neighbors have a junk yard, that is going to have huge implications on the price you can sell your listing for. What do you do about it? Maybe you can talk to the sellers about having a work party and offering to clean the neighbors’ yard — do something nice for them rather than demanding they do it themselves. Maybe help the neighbors paint their house or repair their fence. Help the sellers get creative to solve the problem.

When pricing a home, it is imperative to look beyond the traditional markers of size and location to consider the impact of how buyers will value the home. Avoiding these 5 common mistakes is a good place to start.