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Why You Shouldn’t Set an Asking Price Based on the Amount You Paid for Your Home

You may think that it makes sense to set an asking price based on the amount you paid when you bought your house, but things don’t work that way.

The amount you can get for your house today will depend on its condition, the characteristics of the neighborhood and the state of the economy. Some or all of those things may have changed significantly since the time when you purchased your home.

The House’s Condition
Houses, appliances and other features can wear out over time. If you kept up with maintenance and repairs, and replaced things when they broke down or before they went kaput, your home may still be in good condition. If you let things slide, your house’s condition may have deteriorated. That will affect the amount you can sell it for.

Buyers will be interested in a house with modern features and amenities. Your home’s style may have been popular when you bought it, but if you didn’t make upgrades, it may look outdated to potential buyers. You will have to factor that into your asking price.

Neighborhood Characteristics
Buyers are looking for houses in areas with good local schools and plenty of job opportunities, as well as stores, restaurants and activities nearby. The nature of your neighborhood may have completely changed since you moved in. The schools may be better than they were in the past, or they may be struggling because of budget cuts or other factors. The area may have a thriving economy, or companies may have shut down or relocated, leaving jobs hard to come by. The neighborhood may have lots of successful businesses or entrepreneurs may be struggling to stay afloat. All those things can influence your asking price.

Economic Conditions
In an area with a vibrant economy and lots of job opportunities, home prices may be high. A struggling economy, on the other hand, may depress housing prices. Other factors, such as tax rates, may either draw people to the area or keep them away. Demand can also affect home prices.

The current condition of the local real estate market is also important. A seller’s market has more interested buyers than homes for sale. If you’re listing your home in a seller’s market, you may be able to get a high price. In a buyer’s market, with more homes for sale than people looking to buy, you may have to set a relatively low asking price to attract a buyer.

Discuss a List Price With Your Agent
Your real estate agent can explain how these factors can influence your home’s current market value. Your agent will also have access to detailed information on “comps,” or recent sales of similar houses in your area. Based on that information, your agent will be able to help you set a reasonable asking price for your house.

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