How to Determine the Asking Price for a Home: Listing Agents 101

Disclaimer: PropStream does not offer financial advice; this article is for educational purposes only. 

Of the many skills listing agents have, few are as essential as knowing how to determine a home's asking price.

Despite the availability of online home valuations, most sellers still rely on agents to determine a fair listing price because they know how crucial it is to get it right. After all, pricing too high could cause buyers to overlook the property altogether. Meanwhile, pricing too low could cause sellers to miss out on some of their profit or even lead buyers to believe something is wrong with the property.

How to Price a House for Sale

How do real estate agents determine how to price a home? Listing agents research nearby properties to calculate a fair asking price, which is the amount a seller requests a buyer to pay for the property. This is different from the sale price, which is the amount a buyer pays for the property after bidding and negotiations.

Determining a fair asking price requires understanding a property’s condition and features, assessing the current market, and running comparables. We’ll unpack these steps more in depth in the sections below.

First, Gather Property Details

You can estimate a home's value without seeing it in person, but to get a precise asking price, it’s a good idea to thoroughly research and walk through the property.

Here are some on-site features that can affect a home’s listing price.

Location

Location is perhaps the most significant factor in a home’s asking price. Two homes of the same size can go for vastly different prices depending on their city or neighborhood.

Also, homes close to public transportation and high-quality local amenities or in excellent school districts can demand a higher price.

Property size

In general, the bigger the property, the higher the asking price. This means you’ll need to know the home’s exact square footage, which will also help you determine the price per square foot. Don’t forget to look at the lot size, too. More acreage often means more value.

Age of property

Since a property’s materials, structures, and systems deteriorate over time, newer homes tend to be more desirable than older homes.

Home layout

The number of bedrooms and bathrooms (and half-bathrooms) has a direct correlation to a home’s asking price. Extra rooms or spaces like home offices, furnished basements and attics, air-conditioned porches, and lofts can also impact the value.

Next, look at the layout. Open layouts that combine the kitchen, dining, and living areas are often more in demand than those with separated rooms for those spaces.

External features and structures

Consider looking at the home’s outdoor spaces to get a more accurate listing price.

• Garages are generally more desirable than a carport.
• Swimming pools can drive up the price, especially if screened-in and well-designed.
• Accessory dwelling units (ADUs) can be a potential source of rental income.
• Outdoor living spaces like porches, decks, patios, outdoor kitchens, and sheds or workspaces can make a home more desirable.

While well-maintained outdoor structures can increase a home’s value, the opposite is true, too. Dilapidated sheds, porches with rotten wood, or pools overrun with algae and dirt can have a negative impact.

Indoor features

While walking through the home, take note of any features that could potentially boost the value of the home, such as:

• Hardwood flooring or brand-new carpeting
• Natural stone facades
• High-end countertops
• Windows that add natural light
• Storage space
• Smart home technology
• Energy-efficient systems, windows, or insulation
• Fireplaces
• Vaulted ceilings
• Built-in sound systems

Recent renovations

Did the seller replace the roof recently? Has the kitchen been remodeled? Do the bathrooms look updated? Some renovations are especially valuable, including:

• New garage doors
• Steel entry doors
• Manufactured stone veneer
• Fiber-cement siding
• Electric heat pumps

Research the Current Market

The local market can greatly impact a home’s asking price, depending on when you’re selling, where exactly the property is located, and recent buyer activity. When researching the local market, be sure to consider:

Seasonality: Home prices tend to increase in the spring and summer months due to higher buyer activity.

Inventory: Low housing inventory and high demand are a perfect recipe for bidding wars and escalated prices, while higher inventory levels can require more competitive pricing. Currently, inventory levels are rising, but they’re still lower than before the pandemic.

Buyer activity: Buyer activity can rise or fall depending on economic conditions, mortgage rates, and seasonality.

Days on market (DOM): Understanding the average DOM can help you estimate how long a property will stay on the market before selling.

Conduct a Thorough Comparative Market Analysis

With property details and current market trends in mind, the next step is to complete a comparative market analysis (CMA)—also referred to as running comparables—of nearby properties that have sold recently. Here’s how:

1. Search for similar properties

An accurate CMA requires finding properties that are as similar to your listing as possible, ideally sold within the last three to six months and less than a mile away. Be sure to look at property type, bedroom and bathroom count, square footage, lot size, condition, style, and year built.

2. Calculate adjusted values

Once you’ve collected five to 10 comps for your CMA, analyze each one’s details and compare them to your listing. Subtract value for features the comp lacks and add value for additional square footage, acreage, bedrooms, or bathrooms. List each comp’s adjusted sales price as the price per square foot.

3. Look at expired listings

Take a look at similar listings that have expired recently. Some properties don’t sell because the asking price is too high, so these listings can help you set a pricing ceiling.

Use Reliable Data to Run Your Real Estate Comps

When conducting a CMA, it’s essential to use reliable real estate data, whether from public records or the MLS. For example, PropStream makes it easy to gather comps based on public and MLS data so you get the most accurate and recent information possible.

To fine-tune your research, take advantage of PropStream’s robust demographic data featuring:

• Housing type
• Household composition
• Commute
• Income

And more!